Good home, cheap!
If you are lucky enough to be able to buy a home, I’m sure you are looking for an incredible deal. There hasn’t been a week recently when someone hasn’t mentioned making a lowball offer and how I can help them get a steal deal.
Typical tips are to look for homes that have been on the market for a few months, don’t get emotional, to be ready to walk away from an unresponsive seller, and to make sure your written offer looks professional.
I have seen home buyers make lowball offers on my client’s homes, had their agent call me to tell me the price is too high (usually unsubstantiated), and then get pissed when my seller client told them “no”. There have been a ton of rookie mistakes, so here are some tips to help put together a better lowball offer.
Are you ready for some insider secrets?
- Make your offer “as-is” – One concern that home sellers have is that the home buyer or home inspector will ask for a bunch of repairs be made prior to closingto the house. Realistically, most homes have issues, so look closely at the house before making your lowball offer taking note of to the overall condition as a key factor. Your offer taking the home “as-is” will give you a strategic negotiating advantage.
- Close on the sale quickly – Home sellers are hoping to get the equity or cash out of the house. If you can go to closing in two weeks then many sellers may jump at your lowball offer. Time is a valuable commodity, and if you possibly let the seller stay in the home for a period after closing then it becomes more appealing.
- Eliminate the Appraisal Contingency – You already know if you can get this home at your price then it’s a deal. Crossing out the need for an appraisal will really raise the bar and increase your chance of acceptance. Appraisals can be an item many sellers are having to sweat out since most media outlets have them believing all appraisals are coming in low.
- Pay Cash – Have you ever heard the expression that “cash is king”? The fact that you don’t need a mortgage is very attractive when making lowball offers because, as we all know, banks often cause delays. I know one builder who writes up offers as “cash” on Vienna Virginia tear downs but then signs a mortgage at the closing table.
It is very important that you know what a good deal is on the house you hope to buy. An offer considered lowball is sometimes only 10% off the asking price depending on your market. And if your first offer is rejected, then consider making an improved one. You should be doing your research in advance and have the ability to evaluate a home quickly.
It may be like playing poker
One risk that you should be aware of when you make a lowball offer needs to be discussed up front: The home seller could be so insulted with your lowball offer that she may refuse to ever sell her house to you, even if you come back with a 100% offer. I have seen it happen, so don’t say I didn’t warn you!
Related articles
- Personal Finance Daily: Lowball-offer errors home buyers make (marketwatch.com)
- 5 Reasons People Want a House in Vienna (dougfrancis.com)
