LOVELAND – With the market performing so well lately, many homes are selling at or above asking price. This doesn’t mean that you can’t offer under asking price, but it needs to be under the right circumstances. Here are a few examples of when it’s okay to make an offer under asking price.
A home is overpriced
Just because the market is performing well doesn’t mean that sellers can ask for whatever they want and still miraculously sell for at or above asking price. There are some instances where a property is clearly overpriced. For example, if three-bedroom homes in a particular neighborhood are selling for $320,000 but a seller decides to list for $399,000, it’s unlikely to sell right away.
Overpriced homes tend to sit on the market longer while other properties quickly go under agreement. You may even see some price reductions over time. If you and your real estate agent are confident about a price, then this is certainly a case where you can offer under asking price. Just be prepared to support your figure in case a seller isn’t quite ready to get a dose of reality. By making it clear that you mean no disrespect and that you are basing your valuation on solid figures, you are less likely to alienate a seller.
There are no competing offers
Competing buyers make it difficult to negotiate lower prices. However, if there are no competing offers, this may be an opportunity to do a little negotiating. It’s always better for a seller to negotiate with a ready, willing, and able buyer currently at the table than to wait for potential future buyers. The key is not to be overly aggressive or disrespectful with your offer, given the market value of a home.
Are there signs that a seller is extremely motivated and needs to move quickly! If you are able to close within a short amount of time or without certain contingencies, that may be worth something to a seller. Discuss with your agent whether it makes sense to negotiate a lower price.
Homes in disrepair
A majority of buyers look for turn-key properties or ones requiring minimal work. If you come across a home in need of extensive repair, that can be an opportunity to negotiate price. These homes normally have less competition to begin with, improving your chances. Additionally, most sellers know that condition impacts price and are less likely to be offended by a lower offer.
Above are a few scenarios where making an offer under asking price might be worth a try. It’s important to note that there is always a risk in doing so, especially in a seller’s market. Some sellers may be a bit upset at your offer, especially if you start too low. Additionally, as you start the process, another buyer could step in and completely change things.
You must be willing to lose a property when making lower offers. Discuss with your agent what a particular home is worth and what strategy makes the most sense. Don’t forget to take into account the presence of competing buyers. Every property is unique and should be approached differently.
By Suzanne Plewes, RE/MAX Alliance in Loveland. Suzanne is a broker associate at RE/MAX Alliance. Write to 750 W. Eisenhower Blvd., Loveland, CO 80537, call 970.290.0373 or e-mail email@example.com.