Negotiating a lowball offer in today's market
The Charleston South Carolina real estate market has held up rather well despite the general downturn in the real estate industry and with fewer buyers looking at more inventory. But if you want a "deal" because you've heard how bad the real estate market is, how do you put in a lowball offer on a house and have the seller accept your offer at a significant discount to listing price.
A client of mine asked me why you can't buy any house in Charleston for 10 to 15% less than asking price. The answer is really simple. If the house is well priced, you can't. If a house is terribly overpriced, you can. The starting point and the amount of discount from asking price is not as relevant as buying value.
So let's take a couple of examples. House number 1 is vacant, has been on the market for over 8 months, the price started too high, has been reduced several times and you just have to think that the seller is getting nervous. If the house is vacant, that means that the seller has moved to another place and is basically paying for two homes. Every month that goes by costs more and more.
It's very likely that any offer will have to be considered at this point and more than likely that you will be able to buy this property for 7% to 10% or 15% less than current asking price. If you don't offend the seller with an outrageous low offer and document why you are offering what you are offering and demonstrate proof of your creditworthiness, you stand a good chance. If you just throw lowball offers out there without an understanding of each seller's situation, many are doomed to be rejected.
House number 2 came on the market for the first time in the past week, the house is reasonably well priced from the start and while you might like to offer a little less than asking price, you have absolutely no chance of "stealing" the house at 10% to 15% less than asking price.
Each month when I provide the statistics for the Charleston South Carolina real estate market, it shows the sale price as a percentage of listing price. It's hovering around 96% currently but that is an average. That mean some homes are selling for close to list price and others are selling for considerably less. Your chances of making a successful offer are enhanced with information and an excellent negotiation strategy.
Amy Hoak writing at Marketwatch offers some helpful information for buyers considering making an aggressive offer.
Even though housing is in a slump in many parts of the U.S., those tactics won’t work in markets that remain healthy. And in any location in which an aggressive offer is attempted, there is always an inherent danger in going too low. There’s a real risk the offer will insult the seller to the point that they’ll refuse to counter.
Heed these three guidelines on how – and when – to make an aggressive bid for a home:
- Learn how motivated the seller is to make a deal
- Make your case with hard facts
- Prepare for the possibility of rejection or negotiation
Please read the entire article.