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Jul 30

Should I Make a Low-Ball Offer?

homeIf you’re anything like me, you don’t like to buy anything without feeling like you got a good deal.  When shopping for a house, sometimes that drive for the best deal can get you into trouble.  If you are considering making a lowball offer, there are a few things you should think about first.

#1 – Homes in this market tend to sell for close to asking price.  Look at the chart below.  On average last year, homes sold for about 97% of asking price.  What that tells you is that sellers in the current Yuma real estate market aren’t marking up the price to give themselves room to negotiate.  They just want to get their homes sold, so they are asking for fair market value.

list sold ratio

 

#2 – Who is the seller?  Did you know that the type of sale can impact the seller’s willingness to negotiate?  Take a look at the chart below.  HUD homes, short sales and foreclosures tend to sell for VERY close to the asking price.  If the seller is an actual person, they may be more willing to come down.  By the same token, you need to be conscious of the fact that humans may be more apt to being offended by a lowball bid.  If you are serious about a certain house, you don’t want to offend the seller.

list sold distressed

#3 – How much do you really want this house?  How crushed would you be if someone swooped in behind you with a full-price offer?  If you would be kicking yourself because you missed the chance to buy your dream home over a couple thousand dollars, you might want to re-think your offer.  Remember that on a 30 year fixed mortgage, every $1,000 you finance will cost you about $6 per month.

#4 – How long has the house been on the market?  A lot of people think that the longer a home sits on the market, the more the seller is going to be willing to drop the price.  This is true.  Sometimes.  Every seller’s motivation is different, though, so you should not automatically discount your offer based solely on the fact that the house has been up for sale for a long time.

#5 – What condition is the house in?  If a house is in need of major repairs, you as a buyer need to take the cost of those repairs into mind as you consider your offer.  You need to know 3 numbers:  How much is the house worth as-is?  How much will it cost you to fix it up?  And how much will it be worth after the improvements?  If you do it right, a fixer-upper can be a great bargain.  I have worked with people before who got a great deal going in, and ended up with a beautifully remodeled home for a great price.

before after

#6 – (The Golden Question) How much is the house worth?

The bottom line is you should be realistic.  Make your offer based on what the house is worth, not what it is listed for.  To do that, you better make sure you’re working the right Realtor.  The right agent will be a professional negotiator who is an expert on the local market.  They will be able to advise you on fair market value, and present your offer to the seller in a way they are most likely to accept.

 

 

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