Many sellers price their property knowing that they may receive at least 10 percent less than the fair market value. In fact, many increase the asking price in order to leave room for negotiation. Some buyers won’t make what they might consider a low-ball offer for fear of insulting the seller – but if you don’t ask, the answer is always no. There are ways of presenting the offer that will make it more attractive to the seller.
“When we purchased out last house, my husband and I knew exactly how much we could spend. We estimated what we would be getting from the sale of our current home, which was not yet on the market, and factored in debt that we wanted to eliminate. After seeing the house several times, we made a very low offer based on what we could afford. We weren’t playing games; it’s just what we could afford. Our agent was a little bit hesitant to submit it, but agreed to do so. Our offer was accepted and we were thrilled! The seller was happy, and we were happy, and settlement was a breeze.”
Research how long the property’s been on the market.
If it’s over 30 days and no reduction in price has occurred, you’ll get a better understanding of the seriousness of the seller. Start your offer at 20-percent below asking price if you're in a buyer's market.
Structure your offer so that the seller is encouraged to respond positively.
Submit mortgage approvals along with the contract or offer to pay all cash. Offer a large deposit to show the seller you’re serious. Ask for a short closing period. Put as few contingencies into your purchase contract as possible. The further away from the asking price you are the more successful you’ll be if you make your offer as clean as possible.
Submit a market report along with your offer, indicating the most recent fair market sales prices and providing substantiation to your offer.
Respond to the seller's counter offer by raising your offer the same percentage he lowered his asking price.
Do not inch up in your price, as the seller’s emotions will blur his business sense. Keep in mind that both of you must walk away from the table satisfied that a fair deal has been struck.
Consider the cost of a few thousand dollars and ask yourself if you're willing to lose the house because of it? Calculate your mortgage payments to include the increased price while staying within your mortgage pre-approval guidelines.
Agree to cooperate on any requests made by the seller to make the transaction more attractive to him, like a lease-back allowance if the seller can’t leave the property within the short escrow period you’ve requested. Compromise to put the seller in a frame of mind to accept your offer.
"Some of my sellers ask me why nobody has made an offer on their home. I tell them that it is always a combination of two things: price and presentation. If the house shows well, and has comparable amenities to other homes in the area, but nobody is making an offer, or we are not getting many showings, then it is the price."
"When I recommend a listing price, it is based on the current market conditions, the condition of the property itself, and comparable listings. Many sellers want to price their home higher, knowing that there will potentially be negotiation with potential buyers, however, if it is priced TOO high, then it scared buyers away, both those who are not looking in that price range, and those who may love the house, but not be able to afford it. They are afraid that a low offer will insult the seller. I always tell my buyers – make an offer!" - Whit Harvey