If you've done your research and the home is priced way above comparable sales, then wait until it gets a price reduction before making an offer. This is a buyer's market, however, and ANY offer is usually considered a compliment :)
Good luck to you,
Unwavering Commitment to Service
The real question should be "how to you present an offer that is lower than asking price?". In any given market anywhere from 70-80% of the listings are overpriced. Doubt me? If they were priced right, they'd be SOLD!
So, the real question is how do you present an offer to a seller that is lower than asking in a way that will make sense, that will work for both sides.
1. Your Realtor needs to talk with the listing agent (L/A) and find out what the seller needs-
- Why they are selling (do they have to sell, would like to sell if they get their price, just testing the market)
- When do they need to sell (timing, if there is a financial need, do they need a short escrow)
- When are they moving? (a lot of sellers need to move, but sometimes need the proceeds from the sale to make their next move. If you can work out an arrangement, called a leaseback, where they actually sell the home but continue to live in it for a while longer until they are ready to move (while paying you market rent based on your mortgage payment, taxes, etc.)
- What alternatives do they have to selling (
- Find out about the sellers, their professions, family, school, etc.
All these things will help your Realtor write an offer than will contain the terms that the sellers need. Most Realtors fill out the forms and email or fax. Not effective.
2. Look at the comparable sales. The same sales that appraisers will use to help you obtain financing are the sales that will help determine the value of the property.
3. Local market conditions - are values going up, going down. Ask your Realtor to explain the current market to you:
- Months of inventory - how many homes, like the home you want, are on the market right now? How many sold last month. Divide 100 homes on the market by 20 homes sold last month - that is a five month supply.
- Value trend - look at the sold price per square foot of comparable homes, compare to 12 months ago.
4. Offer presentation - after you have done all this work-
- write a personal letter to the seller explaining why you like the home
- Have your Realtor write a letter explaining why you are the perfect buyer for the home and, due to the fact that you are financing your purchase, you can only pay the amount that comparable homes are worth, and have them include two or three really good comparable homes so the sellers see that you are not just making this up.
- include a color photo of the family.
- include proof of funds for the down payment
- include page one of your credit report (cover up your social security number if visible).
- Include a copy of the earnest money deposit check
- Include a pre-approval letter from a direct lender, stating that you are qualified and state the address of the property and the offer price in the letter. That means that the lender has verified all of your information and only the property needs to meet their lending criteria.
Ask your Realtor to HAND DELIVER the offer and ask to present the offer IN PERSON to the sellers. Very few Realtors do this but it can really make the difference. If that does not work ask your Realtor to try to meet the sellers face to face and at least put a good word in for your offer.
The best offer is made when the seller would like to counter with a higher price, but decides to accept the offer as written. So do not add extra contingencies, just focus on what is important.
Sellers today, in most markets, do not expect to get a full price offer and are usually prepared to accept less. All good offers should be based on accurate information that support it. Your agent should be able to provide you with information on recently sold similar homes in your target location.
It's best to have access to data that can be provided to support the offer. Your offer should be a reflection of the current market activity for your area......not a general amount or percentage of the asking price.
Good luck with your offer and let us know how you make out!
Your Savvy Realtor
Web Reference: http://YourSavvyRealtor.com