The Art of the Lowball Offer
Great article on MSN offering tips on making a lowball offer and getting someone to accept it. They way the market is around here I intend to make a bunch of lowball offers. Does anyone have an idea of what percentage to cut off the top of the asking price? Is there such a formula?
posted by D-D at 5:00 PM
2 Comments:
Hi Drew,
Just stumbled on to this site and thought I'd jump in here. I am a realtor in PA and agree with the thoughts expressed in the article you referenced. While, on average, homes tend to sell a 8 to 10 percent below asking price there is always a lot of deviation that results in that average.
A good realtor working for a seller will do a market evaluation to help the seller arrive at a fair price on their home. A smart buyer will do the same.
There are several ways to go about this...search county records, searching real estate sites for list prices, talking to neighbors, etc. Of course the easiest way is to get a real estate agent to do it for you and, you may be surprised by this, many will at no charge during the off season.
Once you have a feel for what the home is worth you can then discount the price based upon what you feel your discount should be. If you are agressive you may determine that you will not purchase anything above 60 percent of market price. That is up to you...of course the stingier you are the more offers you will make and the less response you will get. Nothing wrong with that. You just have to play the game longer.
The second hurdle to overcome (the first being gaining skill in determining house values) is becoming adept at writing offers. With my clients, I may spend three hours with them drafting their initial offer. All of our offers are presented via Multi-List Contracts...10 pages of specifications, contingencies, coverage of your backside, and addendums. I want my clients to be completely familiar with the contract and that takes time. The second contract we draft may take an hour. Subsequent contracts I can generally prepare for their review and signature.
I have seen single page "intent to purchase" letters forwarded by investors but they don't carry much weight or credibility with listing agents. We do, of course, present them to sellers with appropriate advise.
I know this log is getting lengthy but let me throw a couple more tid bits in here...
People who list their homes for sale through agents have "professional" representation. Granted, the level of professionalism varies with agents but expect that the agent will advise the seller against taking less than market value. Why? Professionally, because we are bound to represent their best interest. Personally, because our commission is derived from the selling price. Enough said here.
Unrepresented sellers, also known as FSBOs or for sale by owners, may provide a better opportunity for profits for a couple of reasons. 1. they may not be familiar with the market. 2. they may not have good counsel.
Conversely, they may be representing themselves because they can't afford to list with an agency...they need every penny from the sale of their home so may hold fast to a price.
Notice that my comments here contain a lot of "may this" and "may that". This is because you never know until you ask the question (present the offer). Every seller has a different situation and you can not begin to guess what that is until you start negotiating.
Finally, a top agent was asked how they became so successful in the real estate profession. His response is one I keep in mind. "If you throw enough sh_t against the wall some of it will stick." I don't know that I would have that printed on a t-shirt but there is some validity there.
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