Just a few years ago when the real estate market was in a tailspin nation-wide and there were lots of sellers who were willing to take a lower price, buying a house at significant savings was relatively easy. Now that home values and sales are on a upward trend and there's less inventory available, it's switching back to a seller's market in most locales. While it's still possible to make a successful low offer when home buying, it pays to be willing to put in extra time and effort and use effective tactics like the following.
Connect with a local Realtor
Rather than going it alone when you're searching for the right property, hire a buyer's agent who understands the local market. A Realtor can pull information on recent comparable sales that are more relevant than current listing prices, and provide you with other valuable data, such how long properties are staying on the market. Additionally, a buyer's agent can help you zero in on any listing that's overvalued, has been sitting on the market for a lengthy period, or is in need of updates or repairs that justifies a lower price.
Learn the seller's motivation
Before you decide to make an offer on a particular home, have your Realtor make inquiries into why the property is up for sale. If the sellers are looking to maximize their profit potential in today's hot market, your low offer will likely be ignored. On the other hand, the sellers may be more receptive to taking less if they're facing a financial crunch, if the property was inherited or they've already closed on another home. Sellers may also be more flexible on the price if their home has languished on the market for months, or it was listed previously but didn't sell.
Once you understand the owners' motivation, you''ll have an easier time deciding whether or not to make a low bid on a certain listing, and you have an opportunity to structure an offer to meet the sellers' individual needs - for example, including a quick closing may get your offer accepted if the homeowner is relocating for a new job out of state.
Make your offer attractive financially
When you plan to offer an amount that's substantially lower than a home's listed price, making a cash offer with a hefty deposit is one way to assure the seller that you're serious and ready to close. An all-cash offer not only helps cushion the blow of a low bid, but it also lessens the seller's perceived risk that the sale may fall through at the eleventh hour. If buying a house with cash isn't an option, you can go a step beyond getting the usual financing preapproval and opt for a fast-track or accelerated-approval mortgage that gives you a firm "commitment to lend" letter to attach to your offer.
Fine-tune your contingencies
The more contingencies a purchase offer contains, the less enticing it looks to a seller, so make yours as streamlined as possible. Don't ask the seller to convey any extra items like appliances or window treatments. Shorten the inspection period, and leave out the clause that allows for negotiations about minor repairs. If you and your Realtor have done ample due diligence and you're confident that the home is worth the amount you're offering, you might also consider removing the appraisal contingency.
Be prepared to negotiate
If a seller comes back with a high counteroffer after you've made an extremely low offer, resist the temptation to simply walk away. In today's seller-friendly real estate market, being willing to negotiate may still garner you a great deal if you take the focus off price. Before you start over on your home buying hunt, it's worth your while to try countering the seller back with a slightly higher offer that includes concessions such as repair or closing cost credits, or tangibles like appliances or furniture.
If your goal is buying a house at a deep discount, don't be surprised if your first few offers aren't accepted. It can take time to find the right property and a seller who's flexible on their price, so keep using the above tactics and don't get discouraged.
If you purchase a product or register for an account through a link on our site, we may receive compensation. By using this site, you consent to our User Agreement and agree that your clicks, interactions, and personal information may be collected, recorded, and/or stored by us and social media and other third-party partners in accordance with our Privacy Policy.
