In many regions across the country, the housing market has been cooling off. Inventories are up, prices are coming down. Basic supply and demand stuff, right?
Well, as is typical amidst such conditions, real estate buyers tend to become increasingly more bold and brazen. Many property sellers are desperate to sell, and real estate buyers are only too happy to accomodate them with an equally desperate offer.
Now there’s nothing inherently wrong with a low offer. Everyone wants to feel like they got a good deal. It’s the American way! I always tell my Sellers that a low offer is better than no offer, regardless of how ridiculous and laughable it may be. It takes time and energy to draft a contract offer. Every offer should be considered as serious and worthy of consideration. If nothing else, it may simply be the starting point for further negotiations.
However, as a Buyer, there are several key priniciples/strategies to writing a successful low offer.
1. The first key is to offer an amount that doesn’t overly insult the Property Sellers, and yet still warrants their response. Your real estate agent should be able to offer you guidance with this. Consider the following questions:
- How long has the property been on the market?
- Have there been any previous offers?
- Have there been any price reductions?
- What are comparable properties in the area currently selling for?
2. The second key ingredient is to strengthen all other elements of your offer. There are many times when other aspects of the offer are nearly as important to the Sellers as price. What accomodations/exceptions can you provide to make your offer more attractive? Consider the following:
- Increase your Earnest Money Deposit amount. The more cash you are willing to provide as Earnest, the more serious your offer will be taken.
- Do the Sellers have a preference for a closing date? Do they want a quick closing, extended closing, or rent-back?
- Write your offer as clean and straight-forward as possible. Keep the amount of contingencies to a minimum.
- Make sure to enclose your Lender’s loan pre-approval letter along with your offer.
- Do the Sellers or Listing Agent have a preference regarding where to direct title & escrow?
3. The last key is to convey a positive upbeat attitude towards the Sellers and their Listing Agent. You’re behind the 8-ball to begin with by offering the Sellers less than what they’re asking. You don’t need to pour salt in the wound by telling them what a ‘dump’ their home is, and then rattling off a exhaustive laundry list of how much work it needs.
You rarely know what a Real Estate Seller’s motivation or bottom-line price may be, but by incorporating some of these suggestions, you’ll definitely come closer to achieving a mutual agreement.