Estate agents fight for commissions and sometimes a high valuation helps win over the client. This means houses often sell for less than the price they are originally listed at. When Which? Make sure to compare apples to apples by looking at properties with similar features, positions and upkeep. Check online to see how long the property has been for sale and whether it has been discounted in the past.
Speed can be a factor too. Chatting to the estate agent — or the owner directly, if possible — can help you get a sense of what their priorities are. Before going in with a lower offer, weigh up the risks involved.
Selling a home can be an emotional process, and sellers may feel insulted if your offer seems cheeky. You also risk losing out to other buyers with more money to spend. In these instances, weigh up your options and stay level-headed. You are the buyer, and you're trying to make an offer below the asking price I have set. I'll explain how a seller might handle such an offer.
From what I've gathered, there is a rule of thumb floating around that you should always offer less than the asking price when buying a house. Some people have even assigned arbitrary percentages to this rule.
These "rules" are not only misguided, they are downright risky for the buyer. The reason is that they don't take unique pricing scenarios into account. You cannot apply some arbitrary rule to every home-buying situation. Consider the difference between these scenarios: Some sellers price their homes realistically, based on comparable sales. Some sellers tend to overprice their homes, based on what they need to pay off their mortgages.
And some sellers will actually price their homes below market value, in order to sell as quickly as possible. Given these three different scenarios, how can you say that it always makes sense to offer below the asking price? In addition to the differences in pricing strategies, you also have vast differences from one real estate market to the next.
In a sellers' market, you would be foolish to offer less than the asking price if that price reflects the current market value of the home. While in a buyers' market, you have less to lose by offering below asking price. Even if the seller rejects your initial offer, they will likely come back with a counteroffer.
We just talked about two of the most important factors to keep in mind when making an offer. You need to consider how the home is priced in relation to its potential market value. And you need to consider the amount of leverage you have, based on the strength of your local real estate market. Keep those two factors in mind for just a moment. Here are two scenarios where it may or may not make sense to offer below the asking price:.
You're in a buyers market. There are plenty of homes for sale, but not enough buyers to absorb them all. As a result, many homes have been sitting on the market for months. Sellers are frustrated and desperate to sell. In this scenario, it would make sense to offer less than the asking price. If the seller shot that down without so much as a counteroffer, they would be foolish.
It's a buyers market after all, so the next offer might not come around for some time. You're in a sellers market. I know, it's and there really aren't any sellers markets right now.
But use your imagination. There are plenty of home buyers but not enough houses to go around. Most homes are going under contract within a week of being listed. Sellers are getting multiple offers from buyers trying to outbid each other. In this situation, it would be a bad idea to offer below the asking price. Recent sales data would suggest that the seller's asking price is realistic.
If you have the cash, you could try making a cash offer on the home. Cash buyers often have an advantage over buyers using a mortgage. But there are drawbacks to consider when you buy with cash as well — so make this decision carefully. You might also try giving the seller a personalized letter along with your offer explaining why you love the home, Forte adds.
In some cases, knowing the home will be going to a person or family who will cherish it can be enough to sway a sentimental seller. Lastly, avoid putting contingencies in the offer if at all possible. This can make your offer stand out above the competition. Need a bigger budget to afford a higher—priced home? There are a few things you can do to improve matters.
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