It’s a buyer’s market. We all know that. And only in a buyer’s market are lowball offers even considered.
Because the market is on our side and we are in no hurry to rush into just any house, we’re planning to make a lowball offer on whatever house we do decide to make an offer on (be it House #1 or another house we find).
I’ve been researching how to make a lowball offer so I go into it prepared instead of over-emotional like I was when we first started our home search.
Here are some big things I’ve been seeing:
- Keep it clean. Make a clean offer, meaning not a whole list of contingencies and other “ifs, ands, or buts”. Go in strong and firm.
- Keep yourself out of it. Don’t base it on your situation (your income, amount you can borrow, etc.). No one cares that you want to buy a $400,000 house, but were only approved for a $250,000 house.
- Don’t walk away after the first counter. Don’t walk away when they counter. This is basically known in the real-estate world as just an invitation for the buyer to make another counter offer.
- But know when to walk away after that. Go into the situation knowing what your max price is and be prepared to walk away from the deal even if your heart is broken.
- Explain your offer. Sellers will probably feel shocked, and maybe angry, when you offer $275,000 on their home that’s priced at $350,000. But, explain you’re reasoning. Don’t just say “it’s a buyer’s market”. Say “this house doesn’t have a finished basement or granite countertops and the house across the street that sold for $40k less does.”
- Be financially ready. Make sure you’re pre-approved for the right amount and have the amount you plan to put down for earnest money, closing costs, and down payment ready to go.
- Don’t delay closing. Set a quick closing date (especially helpful for those motivated sellers).
- Don’t stray below 85% of the asking price. This varies among different articles, but I think this is a good percentage. I think anything lower than that could just result in a rejection.
Here’s more reading on the topic:
The Art of the Aggressive Offer [MarketWatch]
How Low Can You Possibly Go On A Real Estate Bid? [MSN Real Estate]
Have you ever made or received a lowball offer on a house? What other tips would you add?