Updated: May 8, 2019
Everyone loves getting a great deal on a high-ticket item, and real estate is certainly no exception.
When you finally find a house you love, you sit down to write an offer letter — and the game begins.
How low is too low? Is there a sweet spot that can’t be beaten?
It’s always a good idea to consider making a more conservative attempt before going all in with your best possible offer.
Of course, striking that perfect balance is no easy feat — it requires years of experience and extensive local market expertise.
In other words, you need a top real estate agent to help negotiate on your behalf. But the process of finding the perfect realtor is, in itself, a difficult task.
Clever partners with full-service realtors across the country who are experts at getting buyers into their dream homes for the best possible price.
What’s more, when you work with a Clever Partner Agent, you’re automatically eligible for a $1,000 rebate — or up to 1% for homes over $500,000 — to help cover your closing costs (in 40 qualifying states).
Get in touch to learn more and connect with a top-rated, local buyer’s agent for a no-obligation consultation.
In the meantime, here are a few key considerations and tips when making an offer on a house.
Evaluate the Local Housing Market
What’s the market like in your area? Is it a buyers or sellers market?
If it’s a seller’s market, the lowest you can go is probably going to be the asking price. Why? If the price is right on the house (or even slightly above right), the house will go fast.
A sellers market is no time to play hardball. It’s your highest and best, or take your offer and go home.
A buyers market, however, is a completely different animal. That’s the time to start looking at how long the market has been saturated with homes, and if it’s going to stay that way for a while.
If the market is going to stay in buyers’ favor, you have some leeway for a lower offer. That’s when it’s time to look at the value.
Determine the Real Value of the Home
Let’s be honest: the value of a home is only what someone is willing to pay for it. This has to do in large part with what the market is doing, but it also has to do with the neighborhood and features of the home.
You should also look at comps, which will be provided in your realtor’s comparative market analysis, or CMA.
While you want to get a good deal on a home, you also don’t want your offer to not get considered at all.
In 2009, the U.S. was still in a recession. Newly built houses were sitting empty while the prices dropped rapidly.
You could get a home for one-third of the building price because it was valued for less. Even when no one was buying, there were still some prices that were just too low to offer.
While you consider value, think about this: if I were selling this house, how low would I be willing to drop the price in this market?
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Do Your Homework
Dive deep into the history of the home. Are there any liens on the property? Have there been any issues with flooding or fire damage?
Make sure you also look at what it sold for in the past and if any improvements have been made since that date. You want as much data to back up your offer as you can.
This is where your real estate agent comes into play. An experienced realtor will know where to find the right information about liens, improvements, and anything that needs to be reported to the government or potential buyers.
Can You Actually Afford to Buy It?
The amount of money the seller is willing to take for the property means nothing if you can’t afford it.
If you are asking how much you can offer on a house below asking price so that you can get your dream home for a song — you may want to save a bit more.
Asking a low price is more of a dance than anything. You offer a ridiculously low price, and they reel it in a bit higher.
If you don’t have any room to play, you can’t play the game.
Stop Playing Games
You might have come to this post to find a specific benchmark that you could use to base your low offer on.
The truth is, it’s going to be different for each area and each seller. It’s a good idea to sit down with the listing agent and have an honest conversation.
Speak to them about past offers that have been denied and why they were denied. Discuss the seller’s motivation for selling the home, and listen to your own real estate agent’s suggestions of an offer amount.
Then decide on the most you would be willing to pay. Rather than submitting it in writing, have a chat with the seller’s agent about that price.
Let them know that this is your offer, pure and simple, and ask if the seller would even entertain it.
There might be a little negotiation about closing costs and repairs, but you should have a solid idea of whether or not your offer will be accepted when you finally write the seller a letter.
While it would be a lot easier if there was a special formula for what to offer on a house below asking price, the situation really varies.
Choose a real estate agent who really knows the area and is an expert in real estate. Listen to their advice and do your research.
Remember to always keep your own budget in mind when placing an offer on the house. You don’t want to get all the way to closing only to find out that you’re not funded.
Make sure you get pre-approved before even considering placing an offer on a house.
Thinking about placing an offer on a house but don’t know how low to go? You need Clever. At Clever, we work with the top local agents near agents to give you the best real estate service at a discounted price. Call us today at 1-833-2-CLEVER or fill out our online form to get started.