Negotiating the purchase (or sale) of real estate can be a real dance at times and sometimes the best way to invite a seller onto the dance floor is by making a lowball offer. There are some dos and don’ts when it comes to making a lowball offer and if you really want to win – following these real estate tips may just help.
What You Shouldn’t Do When Making A Lowball Offer
- Don’t offer an insulting price – start negotiations at a reasonable level
- Don’t excuse the lowball by offering a cash settlement – to a buyer, it’s all cash whether it comes from your bank account or the lenders.
- Don’t make a lowball offer near the upper limit of your borrowing capacity. The idea of a lowball offer is to save money and this saving should be well below you borrowing capacity.
- Don’t refuse the dance. A lowball offer is meant to start negotiations. As with all offers, there will be a counter offer that is quite high – now the dance begins – rather than walk away, counter their counter offer.
What You Should Do When Making A Lowball Offer
- Look for real estate that has been on the market for more than 4-6 weeks.
- Look for reasons for a seller to accept a lowball offer. Debt, need to move – there are many reasons. A walk-through inspection and casual conversation with the seller can reveal a lot.
- Point out obvious problems with the property that you are prepared to accept rather than insisting on repair following final inspections.
- Look around at other properties and their sales prices and length of time on the market. Make a lowball offer based on those numbers – provide the selling agent with your research that backs up your offer.
- Dance the dance. Play the game. Counter the counter offer and counter again, if necessary. Don’t give up too much ground in your first counter offer – leave yourself room to move. This is haggling at arms length using big dollars.
- If you can gain pre-approved finance – do it. Knowing a sale will proceed because the finance is already approved can make a big difference.
It’s a buyer’s market at present so sellers in some areas are becoming desperate to sell and move on. Make the right lowball offer on the right property and you could walk away with a real bargain.
Real estate tip for sellers: Read all of the above and understand where a buyer is coming from. Often sellers make things hard for themselves by doing the wrong thing – for example, talking too much during an inspection. If you HAVE to sell for any reason, don’t broadcast it – you are giving the buyer the inside running. Repair faults, where obvious, make your property look good and, of course, dance the dance and counter the first offer – you never know, they may accept it.