How to Make a Low Offer on a House
Buying a home is the most important investment that many Americans will make. Like any investment, the price determines whether the investment will be worthwhile. In today's constantly changing real estate market, buyers are nervous about over-paying for a home. To help avoid purchasing a home that depreciates in value in a few years, many buyers may opt to purchase a home at a lower-than-market price. Making a low offer for a home is best practiced during a buyer's market.
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Instructions
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Find homes that are in disrepair or have been on the market for a while. Sellers who have homes that need a lot of work or have been attempting to sell the home for a while will be more willing to accept a low offer. When preparing the offer, figure out how much money is required to fix the home. If the price to fix the home is more than what the home's market value is in its top condition, then you will have paid too much. Skilled investors and contractors have most success using this technique.
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Find out about the seller. Is the seller upside down? Is the seller late on her mortgage? Is the seller moving as a result of a job transfer? Has the seller already purchased a new home? All of these things could indicate that the seller is urgent to sell and may accept a lower offer.
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Offer a low bid and be prepared to negotiate up. This technique is best for homes that are overpriced in a buyer's market. During a seller's market, applying this technique may result in the offer being ignored and missing out on the home altogether.
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Raise a low offer in small increments. Again, this tactic is best applied during a slow market. The goal should be to move the offer up in small increments such as $500. If the seller has had the property on the market for a while and is getting anxious, the seller may bite. If you submit bids in large increments, you may inadvertently meet the seller's expectations before the seller has time to get impatient and take a lower offer.
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Point out the negatives of the property. When submitting a low offer on a house, support that offer with a list of negatives such as a damaged roof, the location on a busy street, crime statistics for the neighborhood, outdated appliances and carpeting, an old fence that will need to be replaced or an unattractive paint on the walls.
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Give something to the seller. To make the offer more appealing, offer the seller something. Offer to pay a portion of the seller's real estate broker fees if that makes financial sense. If the seller offered to replace the carpet, offer to replace it yourself. Being pre-approved by a mortgage company before you make an offer may also be an incentive. If you don't require an inspection, offer to accept the home as is. The seller may trade the desired sales price for a quick closing date.
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Set a time limit to accept the offer when you submit it. This may cause the seller to act urgently to close the deal, especially if the home has been on the market awhile and the seller is anxious.
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References
- Photo Credit house for sale image by Nicemonkey from Fotolia.com
