If you’re following the real estate market news, you’ve probably read a bunch of articles claiming that the market is crashing. That may lead you to believe that sellers are desperate and will take any offer you throw at them. You’d be wrong.
For starters, there is no such thing as a national real estate market. All real estate is local – which means that you need to find out whether comparable homes in the neighbourhood to the one you are interested in buying are selling quickly or slowly and whether they are selling at, above or below asking price.
Once you have the correct information, you can determine if submitting a lowball offer could be beneficial in your situation.
If you do decide to submit a lowball offer on a house, here are 5 tips to help you get that offer accepted:
1. Hire a professional Realtor. You’ll need accurate comparables in order to determine how low your offer can be. Realtors have access to information about all homes in the area including what other properties have sold for, when those sales occurred, how long the properties were on the market, etc. Furthermore, it’s a good idea to make contact with the listing agent before submitting a lowball offer. Speaking to them will give you a feeling of whether the sellers are willing to entertain your offer and it gives you an opportunity to explain the reasoning behind your low bid. In such a situation, a Realtor will be more open to discussions with another professional rather than a random buyer who thinks they know the market better than he or she does.
The right agent will negotiate hard to get the best deal for his clients.
2. Hire the RIGHT professional Realtor. Some agents are not comfortable making an offer that is low because they fear offending the seller or the listing agent. Their focus may be on completing the sale and collecting a commission or they may be reluctant to make an aggressive offer because their negotiation skills are not very strong. The right agent will want to make the best deal for their client – make sure that you have that person working for you.
3. Make your offer as clean as possible. If your offer is low, then make the other elements of the sale attractive to the seller. For example, have a short closing so the sellers can get their money quickly. Also, have a lender pre-approval letter to show the sellers you are not going to get a rejection letter when trying to get financing in place.
4. Offer a substantial deposit. Typically, deposits vary anywhere from 1% to 2% of the sale price of a home. By submitting a large enough deposit, such as 5% or 7%, you will show the sellers not only that you are serious about your purchase, but that you have the cash to have the transaction go smoothly.
5. Do not ask for further credits after a home inspection. Getting a home inspection on any property you plan on buying is a good idea. But unless the inspection reveals a major problem that would be very costly to repair, don’t go asking for a credit from the sellers. There is no perfect home – they all need maintenance and in some cases small repairs. As you are already getting the home for a low price, don’t alienate the sellers by asking for a further discount.
If you are looking to buy a home, or are thinking of selling yours, I would be glad to represent you and help you negotiate the best deal. Please contact me at steve@stevewalsh.ca.
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