Making a Low Offer on Real Estate

There are several circumstances in which a seller might be willing to accept an offer lower than they had originally intended. The first would be if the buyer is paying with cash. This means they will not need a mortgage. Cash offers are great for the seller. It often means that they can close faster on their house. Cash offers can go straight to the attorney and the seller doesn't have to wait for the buyer to finish the process in getting a mortgage. They can close on the property in as little as one week. This is near impossible if the buyer is using a lender.

Two, the seller doesn't have to worry as much about "snags". Many times, the sale of a piece of real estate is delayed due to the process in getting a mortgage. A seller will take into consideration the fact that they will have one or two less mortgage payments to pay since the buyer is paying cash and can close sooner. It's also less likely that the deal will fall through. So, if you are paying with cash you will have better luck having a lower offer accepted.

The terms must be appealing. When submitting a low offer, it's best to have a high amount of earnest money attached to it. This lets the seller know how serious you are about buying the house as this money is generally nonrefundable. If the deal falls through, the money is the seller's to keep. I've seen sellers with two offers on the table for them to consider. One is slightly higher, but the buyers offered only $500 in earnest money. The other is lower, but there is $5,000 in earnest money. The sellers may feel more comfortable with the slightly lower offer knowing that if the deal falls through they have that $5,000. So, ensure that you are placing a high amount of earnest money in the contract when offering a lower price.

It's always a good idea to find out why the sellers are selling. This often becomes a game of "who has the better agent". A good seller's agent will protect this information and not release it to the buyer or the buyer's agent. A good buyer's agent will try to pull this information out of the seller's agent for use in their negotiating tactics. For example, if a seller has a contract on another home that is contingent upon the sale of their current home, this is great for the buyer as the closer it gets to the deadline, the lower the sellers may be willing to go for fear of losing their next home.

If they are in a situation where they are close to foreclosure, this is also wonderful information to have. In this case, the sellers are also desperate to sell. Be careful with this one though because the sellers may need to have a certain amount in order to pay off their current mortgage. Sometimes, they will allow this figure to be disclosed in an attempt to sell quickly.

Are the sellers interested in a leaseback? A leaseback is when the sellers will sell their home on the condition that they are allowed to stay after closing for a certain period of time. They may not be able to move to their next home before a certain date and don't want to be "homeless" for a month or so. It's also possible they are moving because of a job change and the job doesn't start for a few weeks after closing. If your offer is high enough and you want to move in right away, the sellers will figure out where they are going to stay for that period of time. But, if your offer is low and you know that they want do to stay for a month or so, it may be a great negotiating strategy to allow them to stay for 30 days after closing in exchange for a lower offer.

Of course, before you start writing up and making low offers, it's always a great idea to take a look at what similar homes are selling for in that area. Knowing and understanding the market is essential before making any type of offer. This is one great reason why it's important to hire a Realtor. It is free to use their services if you are a buyer. The great thing is, they are on your side and the seller is responsible for paying the commission.