Sometimes, depending on the temperature of the market you’re in, you might partner with your Realtor to bid under asking price on a home you’re interested in purchasing.
There is no guarantee that an offer under asking price will be accepted, but here are three things that you can generally expect when you “go low:”
You Need to Survey the Market
The first thing to expect when you are thinking about placing a bid under asking price is that all home sales are not the same.
A few clicks on the Internet brings up plenty of articles saying that you should always bid at least 5% under asking (and sometimes up to 25%!) just to start up negotiations on a home.
But that’s a pretty silly way to go about things.
This is because of these pricing scenarios.
Some sellers price their homes:
- realistically, based on comparable sales
- too high because they need to pay off their mortgages
- below market value to sell as quickly as possible
If you lowball someone in the first two categories, you are less likely to have the success you would have working with someone from the third example. Because of this, it’s important to partner with your Realtor to help assess the situation.
You should also consider whether the market currently favors the buyer or the seller, i.e. is the market flooded with options or is it currently selective?
You Have to Prepare for Rejection
Let’s say you misread the situation and the market temperature is not in your favor. If you are completely in love with a property and feel like you can’t move forward without it, then bidding too far under the asking price can really backfire.
If this is the strategy you and your Realtor choose to use as you search for a home to bid on, you need to be prepared to receive a rejection on your offer-- one without even the option to find a happy medium.
You Should Brush up on Your Negotiating Skills
If you plan to bid under asking price, it’s very rare that the seller will accept the offer as is, even in a buyer’s market.
Often, bidding under the posted price of a home is the start of a game of financial tug of war. This is where you need to be sure you are bringing something favorable to the table, have a strategy for compromise and are working with a qualified Realtor, because an experience Realtor knows how to protect the buyer’s pocketbook without insulting the quality of the seller’s home.
Preparation, preparedness and the right strategy increase the odds of success.
Looking for a Realtor to help you find the perfect home at the perfect price? Our qualified and friendly team can’t wait to work with you! Contact us today.