With the changing times I'd like to talk about a strategy hurting prospective home buyers.
The Low-ball Offer
A “low-ball” offer is an offer far below what the average price for a home should be for the area.
Unless you want to wait until the next recession to buy a house this strategy won’t be working anytime soon. Most properties are selling between 98% and 100% of the listing price. In this market if you want a house you need to be aggressive.
Also, the 10-20k you are trying to shave of the price will come back to haunt you as interest rates creep up. The difference between a 3.5% interest rate and a 3.75% rate equates to over $15,000 over the span of a 30 year loan and approximately 40 extra dollars a payment.
Not to mention you could be missing out on a house you really love. Home prices are still way off their bubble peaks so paying near ask doesn’t mean you’re overpaying. If a house is priced right it should and will sell for asking price. Also, as more houses sell closer to listing price the comparative sales aren’t really supporting low-ball offers. Without numbers to back up your offer you risk offending the seller by picking a random number and shutting down the lines of communication.
That being said some sellers are trying to capitalize on the change in demand and agents are overpricing homes while they need much more work than their counterparts. In this case, the low-ball is justified. If you have been looking for a while and finally come across the house that really fits your needs, think of what you can afford, and ignore the people telling you to offer 10-15% below ask because “that’s how real estate works”
Sincerely,
Anthony Grosso
www.grossoproperties.com
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