Low Ball Offers…Good Idea or Bad?

I’m having a little bit of an issue with a newspaper article I read recently.  Not to be cantankerous as much as to insure that people have the best and most accurate information possible.

When it comes to what price you are going to offer on a property and the actual price you are going to end up paying (if you decide you really want to buy the property) depends on a lot of factors.  Just because a buyer only wants to pay $100,000 for a house does not mean it is achievable (even in a buyers market) anymore than just because a seller wants $200,000 means he will achieve that price.  Patients and perseverance can play a positive roll although it can have its downside too.  Let’s look at some of the variables.

As a buyer you need to survey and understand the terrain you are about to engage on before you start throwing out prices.

• If you are an all cash buyer and can close a property in, let say 10-14 days, have enough experience and intestinal fortitude (lots of cash behind you) to survey the property personally without any inspections or contingencies…the seller is going to like you and that’s because you have not asked him for anything other than a better price.
• On the other hand if you are getting an FHA loan*, need 45 days to close escrow and are requesting that the seller pay 8,500 of your closing cost, request contingencies for inspections and repairs then request the seller repair the broken heater (FHA will require that), repair the broken window (FHA will require that too), and move some of your personal items into the garage prior to close of escrow the seller is going to think you are a pain in the ass.  Although you have offered very close to, if not full price, the seller might select another offer in place of your that he feels does not ask for as much  or he may consider your offer with a counter offer it at a higher price

We encourage buyers to make lower offers and to ask for repairs and help with closing cost.  All of this has to be tempered with the actual price being asked and offered (if someone offered you a dollar for 50 cents would you take it or haggle) the items the buyer is requesting help on and if there is any competition.  I have seen too many times a buyer loose a home they really wanted not over the price they where willing to pay but over bad negotiation strategies or aggressive competition.  You make the decision, if you don’t try you wont know, just make sure your willing to loose the property if you are too aggressive.

 So, do your homework or if you’re using an agent make sure they do the homework and you will have the confidence to know how good a price you are getting before you sign on the dotted line. (I know, they are not dotted anymore…just sign it!)

  *FHA Loans are good and viable sources of buyer financing that we use and recommend ever week.  The intent is to show that the more you ask for, usually the higher the price you will need to offer in order to keep the sellers attention and not get a rejected offer.  

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