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Low real estate bid that will work

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Services for Real Estate Pros

Buyers like buyer's markets and sellers hate them. Isn't that the way it's supposed to be. Now it's the buyer's turn to rule the roost. Remember seller, only a few years ago you were in the driver's seat. So behave like a reasonable real estate expert when the market shifts and you have to give up some of the past value gains.

Let's examine some of the ways a buyer can negotiate a nice deal with a reluctant seller.

The very first step is to have the buyer get pre-approved for a mortgage loan with a lender you can count on. Establishing this up front will put a positive imprint on the whole low-end offer presentation.

The bid should be accompanied by a fact letter that explains why the buyer thinks this is a reasonable value for the house. The letter should have comparable sales in it and also what is right now on the market. If the for-sale inventory is high, prices are likely to drop in the future and it should be explained that the buyer is prudently taking that into account. It's hard to argue against facts.

A lot also depends on how motivated the seller is. If the house has been sitting on the market for months, there will be certain leeway in the price. That's a good sign for the buyer. Say, if the seller has already closed on another property, then he's carrying two mortgages and that will help soften his attitude. The seller being in the middle of a job transfer is another sign that he might consider taking a lower offer. There are other reasons, but you get the point.

As a buyer, be ready to receive a counter offer that might still make the deal worth your time. Sometimes the seller goes into a cocoon for a few months and then emerges with a new attitude, now willing to negotiate.

 

Posted by

_______________________________________________________________________________

Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst 

www.BluefoxToday.com - syndicated mortgage, housing and property management blog

eskokiuru@gmail.com
My cell: 702-499-1006

Comments (8)

David L. Britt
Platinum Realty, LLC - Olathe, KS
MBA
Esko, sometimes it's too late to come out of the cocoon!  My dad always taught me that a bird in the hand was better than a kick in the pants!
Aug 21, 2007 12:00 PM
John Barry Seattle Washington Home Loans
Home Loans - Kirkland, WA
Good post! As the tide swings to the buyers side i think more and more sellers will realize the market has changed.
Aug 21, 2007 12:08 PM
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate
Esko, our sellers have FINALLY got it. But, it took 5 years, we've been in a buyers market for 6 years here.
Aug 21, 2007 12:20 PM
Esko Kiuru
Bethesda, MD

David,

You are right about the cocoon. Time spent there can cost you.

Aug 21, 2007 01:11 PM
Esko Kiuru
Bethesda, MD

John,

Buyers know it's their turn, so they are making low offers. Can't blame them.

Aug 21, 2007 01:13 PM
Esko Kiuru
Bethesda, MD

Missy,

Some sellers can be very hard-headed.

Aug 21, 2007 01:15 PM
Ray Perry
CENTURY 21 The Neil Company Real Estate - Roseburg, OR
Realtor, CRS, GRI, e-PRO
As time passes sellers will be more motivated to sell at reasonable prices.  We are seeing a distinct difference lately between asking price and selling price.  Two months ago it was about 10% difference.  Currently it is about 6% difference in my market.  When it gets down to 3%, we have a normal market.
Aug 23, 2007 01:14 PM
Esko Kiuru
Bethesda, MD

Ray,

There seem to be cracks in the armor here, too.

Aug 23, 2007 01:39 PM