https://www.financialsamurai.com/how-to-make-a-low-ball-real-estate-offer-and-get-it-accepted/
Making a low-ball real estate offer is one strategy for getting the best deal possible. However, your low-ball offer may also offend the seller and shut you out completely. This article well teach you how to make a low-ball real estate offer and get it accepted.
The housing market is very strong post-pandemic. As a result, there’s a chance you might be buying at the top of the market. If you do buy today, you should plan to hold onto the property for at least five years, if not 10+ years.
During a strong housing market, you need to do your best to try and get a deal. Making low-ball offers is one strategy.
One of the reasons why I’m always on the lookout for real estate opportunities is because every once in a while, a property will come up that seems mis-priced or poorly marketed.
For example, in 2014, our current primary residence was being marketed by a retired, out-of-town agent who only got the listing because he was a childhood friend in the 1960s. He had no pictures on the Multiple Listing Service (MLS) and only had a simple one-page, black and white flier.
Because he was not from the area, he didn’t have a network of other agents to blast his listing to. All he did was hope and pray someone made him an offer in an unknown neighborhood.
So I made a low-ball offer that ultimately got accepted after one counter. In real estate, money is often made on the purchase, not on the sale.
It turns out, there was another buyer who was willing to pay $110,000 more than my offer, but I had already sealed the deal with an old fashioned handshake. I know this to be fact because the agent who helped sell one of my SF rental properties in 2017 turned out to be the competing buyer’s agent for my existing property in 2014!
The real estate market is so much less efficient than the stock market. If you are extremely diligent at looking on your own, you should be able to find some deals. And most recently, I found an off-market listing by luck that could be a great investment.
With the invention of Docusign, it has become extremely easy to submit multiple offers quickly. If you work with an agent, you can submit an electronic offer in under five minutes after she fills out all the basic offer details for you. All you have to do is e-sign with your phone. There is little downside to submitting an offer nowadays.
In 2016, I missed out on buying a property that sold for $150,000 below what I was willing to pay. After that lost opportunity, I decided to pay more attention to my neighborhood real estate market.
Here are the keys to making a low-ball offer without insulting the seller. The goal of your low-ball offer is to not get it accepted at face value. The goal of the low-ball offer is to get the negotiation started.
It is vital for you (and your agent) to know all the recently sold comps in the neighborhood over the past 12-24 months. You must then choose the comp that sold for the least on an absolute price basis and a price/sqft basis. This comp will act as your reasonable anchor for submitting a low ball offer, even if the comp isn’t like-for-like.