When Should You Make An Offer Below Asking Price?
Homes are expensive, and getting more so every day. (Also, water is wet and the sky is blue!) Making an offer over asking price - sometimes by absurd amounts - has become a harrowing norm for today's buyers.
But even as the market rockets upward, there are always those buyers. You know the type: You visit their new home for a dinner party, and halfway through the meal, they lean over to whisper in your ear, "We got a killer deal," they say. "Under list price."
But getting an awesome deal on a house isn't impossible, even in a hot market. If you learn to read the signals, you just might find sellers who are amenable to an offer below asking price.
To be clear: Real estate pros warn against extremely lowball offers (typically more than 15% below listing price) because you might offend the sellers - even if the home's been on the market for months. Strategize with your agent to determine both how far under listing price you're comfortable going, and what you think the sellers might respond to.
These five signs will help you determine when the time is right for a low offer.
1. When the seller wants out
Not every seller wants to wait for an over-the-top, so-much-money-it-takes-your-breath-away offer. Some homeowners want to sell quickly and they're willing to accept lower offers to do so.
2. When the home is blatantly, obnoxiously overpriced
Just because a home is expensive doesn't mean it's overpriced-it might be worth every penny. But sellers do often get an inflated sense of their home's value. And those homes can languish on the market. Work with your agent to look at the comps for your area, and find out what other homes are selling for. If there's one that makes you say, 'they're out of their minds,' it might be ripe for a low offer.
3. When you're not picky
Maybe you have a flexible wish list. Two bedrooms, three bedrooms - more space is great but you really only need one, right? Perhaps you care only about how your house looks on the inside. Or maybe you're planning a full renovation no matter what you buy.
If all you care about is price, don't feel bad throwing below-asking offers left and right.
4. When the home has hopped on and off the market
Keep your eyes peeled for a home that's been on the market, then off, then on again. This home might be a prime candidate for your low offer. After all, imagine the seller's irritation: Listing a home can be an arduous process, filled with open houses, surprise showings, and negotiations - only to have the buyer back out at the last minute. But before you make an offer, see if your agent can get some intel: It's possible there's another reason the sellers are listing and relisting their house-such as they don't actually want to sell.
5. When the home is outdated
Elizabeth Gigler, and agent in Naperville, IL, has three requirements for going in low: First, the home must have been on the market for more than 60 days. Second, the home must have old mechanicals. (Updating a vintage HVAC system could cost thousands of dollars-meaning that a low offer is entirely justified.) Third, the home is completely outdated.
That '70's era burn orange shag carpeting isn't anyone's style these days. The sellers might presume they'll get full asking price without swapping in something more neutral; however, they might change their tune after a few months on the market without any offers.
That's when you swoop in with a low offer - and get yourself a killer deal to brag about at your next dinner party!
Credit: Jamie Wiebe - realtor.com blog