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:
- 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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