No offer is worth the paper it is written on unless it gets to closing. You need to provide much assurance that your contract will make it to closing. That includes sizeable earnest monies (not to be confused with down payment $), a preapproval letter that outlines your qualifications with more detail, a preapproval letter from a direct lender that the seller will recognize, and quick commitments for earnest deposites and meeting full mortgage contingencies.
Other components of the offer which will be your bargaining chips for a lower price are quick inspections, and closing dates.
When making a low offer, you will need to support it with data. You need to convince the seller that this is the best decision for him/her at this time. Support your offer with comps and a letter explaining at how you arrived at your offer.
How important is this home to you? Are you going to be very upset if you don`t get it?
How relistic are you, if you were selling would you accept that offer?
Jen is right present the offer in person, it is really up to what type of spin your Realtor puts on it.
Another important consideration is whether you mind much if you offend the seller. In our area, lo-balling may result in the seller refusing to sell to you at any price. So think about this carefully. I always call the listing agent first to see whether they will even look at such an offer. Often they will not, and you'll still have options open to you.
If the idea still seems appealing to you, I also recommend having a buyer's agent present this offer in person to better bolster your position.
If you are sreious however, and are not just wasting people's time, offer something within reason, discounting deficiences with the property...have some justifiable quantifiable reason such as:
1 Needs new door = -$200.00
2 Needs paint job = -$500.00
This way your offer makes sense...otherwise, why would the seller consider your offer?
You should base your offer on what the current market value of it is. In my market, if a buyer(s) submits an offer that is too low, they run the risk of completely insulting the seller and getting no response at all from them, thus never having the opportunity of entering into negotiations.
Any successful offer has to be justified and have a plan to fend of objections. If you are buying a re-hab proprty for example, you take the market price of re-sales in prime condition including days on market. Then you deduct the re-hab costs including your time, then deduct your profit you want to make and any sales commissions if you are re-selling it.
So if they counter saying your offer is too low you have third party market factors and hard costs to refer to. No one can argue with that unless they want to chance the market.
So my question to you is what is your stratergy???
Let's say it is "priced to sell" and comparable sales justify that statement. A low offer in this case might be good because they are motivated or it might be bad because they are already offering it low.
Let's say it is "priced right". How long has it been on the market? If it just came on the market and you make a low offer, don't expect to ever own that home.
Let's say it is "over priced". You don't want to insult the owner if you really want this house. Find out before making the offer, what terms the seller wants. If you are working with a buyer's agent, have the agent contact the seller's agent and say you are writing up an offer. You want to make the best presentation possible so please let me know what terms the buyer wants. The seller's agent could even have the contract completed for everything except the price. Include a letter with the offer (and have your agent present it in person) apologizing for the low amount and to please not be offended. Say you are sincere and if the seller chooses to reject your offer to at least let you know when and if things change. Persistence can get you one heck of a bargain. My father and my sister both bought some great water front property for dirt cheap but they had to wait over a year each. A simple letter, if you change your mind, give me a call was all it took.
How long has this home been listed for sale?
How motivated is the seller to really accept a contract on this property? In other words, why is the seller moving?
Is it bank-owned or a relocation? These two situations have very specific dollar amounts required.
Are you lowering the price on the property substantially plus asking for more money elsewhere in the home sale?
Every home has a price below which the seller will not sell and this needs to be considered.
Why are you offering a low price on this property? If there are reasons, tell these to the seller's agent upfront and attach a letter to the offer. Common courtesy goes a long way.
Talk with an agent in your state about this property to get geographically-specific advice about this property and get market statistics.
If you are in Virginia, e-mail firstname.lastname@example.org with any other questions.
Keller Williams Realty, 385 Garrisonville Road, #105, Stafford, VA 22554