Fairfax Realty Elite
Keji Ogunleye
Making a Low ball offer on a house. Can I offer less than the asking price?
Talk to real estate professional at 301-613-2043
As agents, we get these questions every time from buyers: Can I offer less than the asking price? Can I make a low ball offer on a house and see if the seller will negotiate? My answer to these questions is you can make any offer you like, but is up to the seller to either accept, reject or counter the offer. However, before deciding to make a low ball offer consider the following:
low ball offer
- Home prices are based on the current market condition, home sellers working with agents price their houses based on what other homes are selling in the neighborhood, and not on what is selling in the state or in the country. The real estate market is local, extremely local. House prices in Bowie, MD  are very different from house prices in Upper Marlboro, MD even though they are in close proximity. Even within Upper Marlboro, the house prices differ based on the zip codes. For example, a house prices in the Upper Marlboro zip code of 20774 is higher than a house in zip code 20772. In deciding to make an offer, consider how much other houses in the subdivision or neighborhood are selling for. Is the price comparable to the others? Sometimes, when a house is over priced the seller may not be motivated to sell and as such any low ball offer will not motivate the seller to respond.
How long the house has been in the market?
When a house just gets into the market, home sellers generally will not entertain low ball offers. Before deciding to make a low ball offer, ask yourself: How many days have the house being in the market?  How long did it take other houses in the area to get an offer? How much showing is the house getting? Many times when a house that is appropriately priced gets in the market, regardless of what time many buyers want to see the house, increasing interest means a contract is sure to be offered very soon. Many times a low ball offer will not get a second chance if there are multiple offers on a house.  I listed a house in the Upper Marlboro zip code 20774 in October, the first day the house was on the market, we had over seven showing requests and by the second day, we had 5 offers. Why?  The house was priced appropriately and competitively. When the house gets on the market, there are seven other houses for sale in the market, five are under contract within a few days, the other two are active, but are often over priced.  In the offers we received, two of the offers were full price, three of the offers were over the listed price and two were low ball offers. The seller made a counter offer to the two offers that were over the asking price and the house was sold for $15,000 over the asking price.  In this real life example, the low ball offers was rejected without any chance for a counter offer. Sometimes, buyers will not a have a second chance. Before deciding to make a low ball offer, consider how long a house has been in the market and the level of buyers’ interest.
-Condition of the house
Before deciding to make a low ball offer, consider the condition of the house in relation to the other houses in the neighborhood that were recently sold.  Does the house need a lot of work? Is the house in move-in ready condition?   When a house is in move-in condition, sellers many times will not entertain a low ball offer. If a house needs some cosmetic work such as painting and new carpeting, the first question should be how much generally it will cost for these repairs. Sellers, many times, have an idea what it will cost to make some repairs and are willing to give concession for these repairs, but not accept a low ball offer.  In a townhouse for sale in Bowie that I recently sold, the townhouse needed some cosmetic repairs that would cost about $5000 based on a recent estimate. When the house got on the market, the cosmetic repairs were factored into the asking price. In two weeks the seller got three offers, one offer was for the asking price with three percent closing concession, the other offer was $10,000 below asking price and also asking for 3 percent closing concession, and the last offer was for $50,000 below asking price.  All these offers came in at different times; the seller decided to negotiate with the full price offer contract and accepted the offer after reducing the concession to two percent.  The lesson behind is before deciding to make a low ball offer consider how much you like the house. Also, ask yourself: will you have competition?  Many times, buyers only have one shot at getting a house, be sure to always put in your best offer.Before making a low ball offer, consider the condition of the house in relation to other houses in the neighborhood.
Valuations
Some buyers get home valuations from some of the online instant valuation site and reference that as the basis of their low ball offer. Online valuations like zestimate and trulia are grossly inaccurate. Many times, these valuations are 40-50% off on the value of a property and in some cases for unique properties they can be up to 70% off.  The data they use are many times outdated making the valuations will be incorrect.  The lesson here is: don't rely on these instant valuations to make an offer, ask your agent to provide a list of recent home sales in the neighborhood and compare those prices to the house for sale before making an offer.
Type of sale: Short Sale or Foreclosure

 

Many buyers tend to believe that because a house is a short sale they can make a low ball  offer and expect the bank to accept or negotiate with them. The truth about short sale is that many sell for close to the market value. Short sale lenders will do market valuations and make a decision on the price based on that valuation. As an experienced short sale agent, all of my short sales are priced very close to market value depending on the condition of the property. I also advised sellers on low ball offers since they will have very little chance of being accepted by short sale lender.  In a recent contract I wrote for a buyer client, the short sale property was listed for $255,000, the property condition was fair. It needed work before anyone could move in. However, similar homes in the area were selling for $320,000. My buyer client decided to offer $155,000 against my advice. I informed the buyer that the chance of the contract being accepted by the seller is next to nothing, but I wrote the offer.  As predicted the seller did not accept the offer, the house went under contract for $260,000- Someone else knew how much the house would be worth after repairs and made a very competitive offer. Short sales are already a discount and they are going to sell very close to market price.
 
Foreclosures are going to sell for close to market value as well depending on the condition. Just like short sales, foreclosure properties are also bank-owned properties and go through property valuations once the foreclosure process is completed before the house is put on the market for sale. The foreclosure lender will conduct a property condition inspection and some will request contractor estimate on what the necessary repairs will cost. All these factors are considered when deciding on the sales price. Some buyers think that because a house is bank-owned or foreclosed, the lender is desperate to get rid of the house. On the contrary, they want to sell the house, but they will not give it away. As with standard sale or short sale, ask for recent sold houses and make decision based on the market and condition.
 
Again, the real estate market is very local and state or national information should not be use as a basis of making offer on a house. Talk to a professional and use data to make a reasonable offer.
Keji & Associates of Fair fax  Realty is a team of licensed agents working daily to get homes sold for our clients in Bowie, Upper Marlboro, Fort Washington and other parts of the metro area. We delight our clients by delivering  world class service every step of the way and we strive to create a win-win situation this  is all part of our values and beliefs. Contact us @ 301-613-2043 , email keji@metrohomesrealty.com or visit our website . www.metrohomesrealty.com

 

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