Yes, yes, I know. It’s a buyers’ market. So much inventory, low housing prices, so the buyer gets their pick at the price they want. But not so fast. Yes, lots of inventory, lower housing prices. However, there is still power to negotiating. And you don’t want to insult the seller with a lowball offer and lose your dream home because of it. Here are some mistakes that can be made with a lowball offer:
1. Not knowing the market. And each one is different. What may be a more acceptable offer in one market won’t be the same in another. There could be an area where sellers are pricing homes more aggressively; therefore, they’re sticking close to their asking price. Another neighborhood might be mostly made up of foreclosures and short sales, so the bank wants to get rid of the home ASAP and are willing to accept less. So you’ll need to do your research with the help of a qualified Realtor (see #2)
2. Not picking the right Realtor. They have the experience and the background and know the area you’re looking to purchase, so they’re your best asset going into a negotiation. But you have to make sure they’re solid negotiators, since they are working on your behalf. They’re not going to tell you not to present a really low offer, but they might say the sellers will reject it offhand so you might want to consider raising it by X amount or offering to waive one of your contingencies. Trust their advice. You’re working as a team and you want to make sure your agent also has your best interests at heart.
3. Not knowing what you’re willing to pay. A lot of people these days in this market are focused on getting the best price. But you have to be careful. You have to know what your limit is so you don’t overpay. And sellers will know what they need to walk away from the closing table or they won’t be able to make the sale. No matter how wonderful the home is and how perfect your furniture will look in it and that you can see yourself having your morning coffee on the deck overlooking the pond, there comes a point where no deal is worth it at a certain price. Know that before you start negotiating or you’ll let your emotions get the better of you.
You can also lose your positioning power by being too hard a negotiator at the beginning. Don’t make your first offer your final offer and then start negotiating. The seller will know that you aren’t serious and has the ball back in their court. Make your offer one that you’re willing to negotiate and have your Realtor tell the seller you want to work with them and make the deal happen.