Introduction

Buying a house is a significant financial decision, and making an offer on a property can be both exciting and daunting. Knowing how to make a fair offer and avoid lowballing can make the process smoother and increase your chances of securing your dream home. In this article, we will explore the steps to make an offer on a house, what constitutes a lowball offer, and how we help our clients determine a fair price.

Steps to Make an Offer on a House

1. Get Pre-Approved for a Mortgage: Having a pre-approval letter from a lender shows the seller that you are a serious buyer with the financial means to purchase the home. This can strengthen your offer and give you an edge over other potential buyers as well as help you determine what makes sense for you financially.
2. Research the Market: Before making an offer, we help our clients understand the local real estate market. We will compile data of recent sales of similar properties in the area to get a sense of what homes like the one you want are selling for.
3. Determine Your Offer Price: Based on our research, we will sit down and decide on an offer price. Consider factors such as the property's condition, location, and the seller's motivation to sell.
4. Contingencies: Contingencies protect you as the buyer by allowing you to back out of the deal under certain conditions. Common contingencies include a satisfactory home inspection, securing financing, and the appraisal meeting or exceeding the offer price.
5. Write an Offer Letter: We will help you draft a formal offer letter to the seller. This letter should include your offer price, contingencies, and any other terms you wish to include. We make sure to express your interest in the property and clearly lay out why you believe the property would be a good fit for you.
6. Submit the Offer: Once your offer letter is ready, you give us the go ahead to submit it to the seller's agent. The seller can accept, reject, or counter your offer. Be prepared for some negotiation before reaching an agreement.

What Constitutes a Lowball Offer?

A lowball offer is one that is significantly below the market value of the property. While there's no exact percentage that defines a lowball offer, anything more than 10-20% below the asking price can be considered lowballing, especially in a competitive market. Lowball offers can sometimes insult the seller, leading them to reject your offer outright or refuse to negotiate further.

How to Determine a Fair Price

Determining a fair price involves a combination of research, market conditions, and professional advice. Here are some tips to help you find the right balance:

1. Comparative Market Analysis (CMA): As your real estate agent we can perform a CMA, which compares the property to similar homes that have recently sold in the area. This analysis provides a realistic estimate of the home's market value.
2. Consider the Condition of the Property: If the property requires significant repairs or updates, we may have room to negotiate a lower price. However, make sure your offer reflects the cost of these repairs and is still within a reasonable range based on market data.
3. Assess Market Conditions: In a buyer's market, where there are more homes for sale than buyers, you may have more leverage to make a lower offer. In a seller's market, where demand exceeds supply, you may need to make a more competitive offer closer to the asking price. We will work with you to help you understand the current market conditions and determine a fair price.
4. Understand the Seller’s Motivation: If the seller is highly motivated to sell quickly, such as due to a job relocation or financial reasons, they may be more willing to accept a lower offer. Conversely, if the seller is not in a hurry, they may hold out for a higher price.
5. Use Your Budget as a Guide: While it's important to make a competitive offer, you should also stay within your budget. Consider your financial situation and ensure that your offer aligns with what you can afford without overextending yourself.

Conclusion

Making an offer on a house requires careful consideration and a solid understanding of the market. When you choose us to help you do your research, and determine a fair price, we can help you make a strong offer that stands out to the seller. Avoid low balling at all costs, as it can damage your chances of securing the property and create unnecessary tension in the negotiation process. With the right approach, we can navigate the home buying process together, confidently and successfully!

Ready to start your home buyer's journey? Leave us your information below and let’s get started today!