Are low-ball offers a good idea?
Any offer can be presented, but a low-ball one that is substantially less than the asking price can dampen a prospective sale and prevent the seller from negotiating at all. Unless the home is overpriced to begin with the offer will probably be rejected.
Do your homework before making an offer. Compare prices of recently sold homes and new listings in the surrounding neighborhood. It also helps to know something about the seller’s motivation. A lower price with a speedy closing, for example, might motivate a seller who must move, has another house under contract, or must sell quickly for other reasons. Also recognize that while your low offer in a normal market might be rejected at once, it might motivate the seller in a buyer’s market to either accept it or make a counter-offer.
How to Stay Ahead of The Game
- Be flexible. Never say, “take it or leave it.” That can sour negotiations and ruin the deal.
- Never show your hand or reveal your next step.
- Each time you increase your offering price ask for something in return, such as repairs, appliances, even lawn furniture.
- If you plan to pay cash or have a tentative commitment for a loan, use your strong financial position as a negotiating tool.
- Don’t let emotions such as pride, fear, love, and anger get in the way of negotiating the best deal. Leave irrational feelings at home.
Negotiating Below Market Price
This is always an option, but do not hold your breath. It takes a lot of determination and time to find a real bargain. But if you are adamant, here are some likely targets to pursue:
- foreclosed property
- a fixer-upper
- hard-to-sell new homes in a housing development
- tenant-in-common partnerships.
With the latter, you may be able to buy a partial interest in this form of title to property owned by two or more individuals because the partners often sell at a discount.
However, bargains are easier to come by in a soft real estate market, when the economy is in a recession, and when homeowners, and builders and sponsors of condominium conversions, are desperate to move unsold units.
Always Include Contingencies in Your Offer
When you begin looking for a home, anticipate potential problems and protect yourself against them by including contingencies in your offer. In the case that something does go wrong, you will appreciate being in a position that allows you to cancel the contract without penalty.
Most offers include two standard contingencies: a financing contingency, which makes the sale dependent on your ability to obtain a loan commitment from a lender, and an inspection contingency, which allows you to have a professional inspect the property.
Without contingencies, a buyer could forfeit his deposit under certain circumstances if he backs out of a deal. The purchase contract also should include the seller’s responsibilities, such as passing clear title, maintaining the property in its present condition until closing, and making any agreed-upon repairs.
If you have additional questions about negotiating a great deal, please call (304) 279-7468 to speak with Angela. You can also email her [email protected]