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Should I Offer Less Than Asking Price? Start Here

by | Feb 17, 2022 | Buying

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Buying a house is often the most expensive purchase a person will ever make in their lifetime. Knowing when to offer less than asking price might help save money in the long run. Many buyers wonder what they can offer on a house and what a seller would ultimately accept. A home buyer can always offer lower than asking price. But doing so might offend the seller and cause you to miss out on a dream home. Below are some helpful tips on deciding whether or not you should offer less than asking price on a home.

Is it a buyer’s or seller’s market?

One thing to consider when deciding on what price you want to offer is whether it’s a buyer’s market or seller’s market. Your ability to make what you might consider a lowball offer, depends greatly on market conditions and what a seller is going to accept.

Make sure you determine what kind of market you are in. Start by looking at the number of homes in the market’s inventory and average days on market. Traditionally, a buyers market is going to be a lot easier to offer lower prices because of flexibility. This is because the inventory is higher. With that, homes usually tend to sit on the market for quite a bit longer than homes in a seller’s market. A buyer’s market also means that there are fewer offers and a seller might be willing to negotiate with you.

In a seller’s market, it’s much more difficult to go below asking price. This is because there is a larger pool of buyers and often more offers on a home. Inventory is usually low and many sellers will see that there are multiple offers on their homes. If you are determined to make a home yours in a sellers market, it might be worth considering offering the asking price or even going above the asking price.

Before you start submitting offers, your real estate agent should be able to help you determine if you are in a buyer’s or seller’s market. They’ll look at average days on market, current inventory, mortgage rates, etc. to help you determine the type of market you are in. Ultimately, this will tell you if you are able to offer below the asking price or if you should offer differently.

How many days has the home been on the market?

When you are actively looking for a home to buy, it’s a good idea to keep a pulse on areas that you like. It’s also helpful to be aware of homes that are being listed in those areas. Say you notice homes in a particular neighborhood you like are selling in a couple of days. It might not be in your best interest to make a below asking price offer. However, some properties stay on the market for months or even years at a time. In this case, it’s more likely that the owner is motivated to sell and open to lower priced offers. A motivated seller can often mean more flexibility on price. This is because the seller has less leverage when it comes to negotiations.

However, just because you’ve figured out that a seller falls into the category of motivated doesn’t mean you should make an offensively low offer. This may cause you to not be taken seriously as a buyer and you will lose out on the deal. 

Any website that has properties listed for sale will tell you how long a home has been on the market. However, some sellers strategically take their home off the market and put it back on to make it look like their property hasn’t been on the market for too long. A good agent will be able to catch this and advise what the best route for you as a buyer is.

How does the home price compare to other homes?

As you start to get a sense of what’s happening in the area you are looking in with regards to average days on market, it’s also a good time to keep an eye on the homes in the area. As you observe an area, you’ll start to notice trends in listing price, days on market, and price reductions. This gives you a good idea on the price range. Plus, it helps educate buyers about what’s a good deal and what isn’t.

Once there is a general idea of what homes are going for, you should ask your agent to work on a comparative market analysis (CMA) of the home you want to make an offer on. This can help guide you on whether or not you can offer below the asking price. 

How much do you want the home?

Everyone wants a deal. But sometimes the desire to live in a place outweighs the pros of getting a good price. If you really want a place, then it might be worth considering everything mentioned above. Not to mention the value of your emotional attachment to the house you are placing an offer on. Ask yourself how you would feel if the offer got rejected. If the answer is “terrible” then consider offering asking price or even above asking price for the property.

If you’re lucky, the home you want has been on the market for awhile or it’s in a buyer’s market. This puts you in a situation to negotiate and ultimately allow you to offer less than asking price. Unfortunately, this scenario is uncommon. Thus, a buyer should be prepared to participate in a buyers market, a seller’s, or even a neutral market where an equilibrium price is agreed upon.

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The information contained in this blog is for general information purposes only, and while believed to be accurate, Trelora assumes no legal responsibility for accuracy. Information provided within should not relied upon as legal advice. Please consult with your local advisors for independent information regarding availability and applicability in your market.