When crafting a purchase offer, it is first important to understand the several truths of the real estate sale.
It is important that all buyers remember that Homes will generally sell at market value.
Market value is determined by what a buyer is willing to pay.
Market value is not a fixed, rigid price, but instead is a range of value.
This is because no two buyers are alike. While one must have a pool, another will consider a pool a liability.
Bottomline, you the buyer are the market.
As in many areas which are continuing to experience declining home prices, we see the "low-ball" offer becoming the leading offer (new pink) for Spring buyers.
The term low-ball (price), generally defined as the deliberate underestimation of cost or value. In real estate, the low-ball offer means an offer significantly below a seller's asking price.
In the current real estate environment, there are two distinct categories of buyers.
One includes the traditional buyer looking for a good home at a good "value" today, because today is when they are shopping.
The second is a buyer with less concerned with timing or even suitability of the property and much more concerned with value, not only in the context of value today but in terms of anticipated value tomorrow or next year.
Regardless of the category in which you fall, keep in mind that both buyers are in the market at any given time.
Unless your goal is to accumulate a scrapbook of rejected offers you will one day share with your grandchildren, it is critical to remember that you are offering to purchase a home.
A home, unlike a share of stock, a gallon of milk, or a commercial office building, is inherently emotional.
So, it is helpful to keep in mind a few dos and don'ts when creating your offer:
1. Don't offend. Unless you are offering on a property which has been held purely for investment, the seller is emotionally invested in his property.
Do not try to trash-talking the seller's shelter is not a winning strategy.
Statements like "This offer reflects the fact that the premises will require professional cleaning with a blow torch prior to possession" may just get you and your offer kicked to the curb.
2. Do get personal. Write a cover letter summarizing why you believe this is the right home for you.
On many occasions, I have seen sellers accept a lower offer because they felt a connection with the buyer.
The seller has a dog? It never hurts to mention that your own pet, who has been on Prozac since moving to your current top floor studio apartment, is (or soon will be) "digging" the large rear yard.
The seller raised his children in the home? Why not mention something about anything personal within your circumstances that may sway an acceptance, it my not help but it couldn’t hurt.
3. Don't defend your offer the wrong way. As in, by saying it is all you can afford or that you are basing it on what you believe values will be during the next lunar cycle.
This approach will likely leave the seller with the notion that there is a buyer out there, one who isn't you, who can afford his home and at the price it is worth now.
4. Do know the seller's circumstances.
Does the seller want to move or does he need to move?
Does he need to be out of Dodge by sundown, or is he just toying with the idea of relocating to the mountains if he can get "his" price ?
Circumstances will dictate whether there is a bargain on the horizon, and knowing this in advance can save everyone the aggravation of a long trip to nowhere.
5. Don't preach. Your agent has given you information on comparable property sales.
Beating the seller over the head with your 16-column spreadsheet will not endear you to him.
He has set a price, presumably after having taken this same data under consideration.
You may believe his price to be high, but it is his price. Insulting his intelligence will not further your cause.
6. Do be prepared to negotiate. No buyer wants to think they paid too much, and no seller wants to think he sold out.
Expect to go a round or two. "Take it or leave it" offers are rarely met with excitement from the seller, regardless of the price and even in this market.
In negotiations, everyone wants to feel like they were in control and that they prevailed.
7. Don't be unreasonable.
There is value, and then there is crazy-talk. If a home is offered for X, and you are willing to pay 10% less than X, do not offer X minus $1 million and then ask the seller to throw in his bedroom furniture and a pony.
You will not be taken seriously.
Today's real estate market is teeming with opportunities for the buyer. Great values, values relative to prices a year or two or more ago, are plentiful.
But, insanely great "deals" are still needles in the haystack, because market value will always be determined by what a buyer is willing to pay.
This buyer might be you, but if you are unrealistic or even simply careless with crafting your offer, it will probably be someone else. rtwb
