Ways to Make a Low Offer on a House in a Competitive Market
In a competitive real estate market, getting a ‘deal’ on a home may seem impossible. But in some cases, savvy buyers can still make a low offer on a home—and win. Here’s why.
* Some sellers don’t listen to their agents—which can be good for buyers
Some sellers simply don’t take their agent’s advice. It’s their loss, and your potential gain.
Consider two similarly sized homes for sale on identical blocks in an El Dorado Hills, Calif. subdivision. It’s a frenetic market with little inventory and plenty of buyers. Both homes were built around the same time with similar finishes/fixtures. Home A is priced reasonably at $699K. Home B is over priced at $759K.
Home A ($699K) receives multiple offers over asking and sells for $745K within a week. Home B ($759K) sits on the market for weeks. Buyers think there must be something “wrong” with it. After 30 days and zero offers, it becomes a “stale” listing.
This is when a smart buyer will come in with a low offer. The seller, because he over-priced his home, now must entertain an offer of $725K. He ultimately settles for $735K. The result: The buyer of overpriced Home B gets the house for $10K less than the buyer of Home A, which had multiple competing offers and sold for over asking.
* Some homes don’t show well
Consider a third home for sale, Home C, also priced at $699K in El Dorado Hills. But this is a hoarder’s home. It’s crammed full of stuff and furniture. It hasn’t been painted in years. The kitchen cabinets have seen better days. The wall-to-wall carpet in the living areas is a stain fest. To top it off, the seller is a smoker—and you can’t miss that smell. The seller has resisted the suggestions of his agent to thin out the home, put some things in storage, do some painting, and get rid of the smoke smell.
This home, too, sits on the market for weeks and weeks. But the savvy buyer realizes that nearby Home A sold for over asking. She does the math and realizes it would only take a few weeks’ worth of work and about $20K to make Home C move-in ready.
The buyer makes a low offer and gets the home for $687K. After the cleaning and cosmetic work, she has spent a total of $707K. The comparable property, Home A, went for $745K. And so the ‘hoarder home’ buyer is rewarded with nearly $40K in equity for rolling up her sleeves and getting to work.
Don’t be turned off by these homes like most buyers are. Instead, see them as an opportunity. Think outside the box and do your homework. Over priced homes and properties that need work can enable a smart buyer to make a low offer in a competitive market—and get a good deal.