The Art of Making the Lowball Offer for a Property
Are you looking to buy a piece of Edmonton real estate in the near future? Then you’re probably planning out strategies you can use to get the best possible price on your ideal home. And if one of those strategies you're considering is a low-ball offer, you don't want to miss the rest of this post.
How to Make a lowball Offer More Appealing
Buying a starter or move-up home can include lots of different costs. That's why negotiating for the lowest possible selling price is always in your best interest. A lower selling price will give you more room in your budget for repairs or renovations, closing costs, and furnishings. But if you’re planning to lowball a seller, you’ll want to take some steps to make your offer more appealing.
lowballing puts you at a disadvantage in a bidding war and could even offend the seller. But with these smart lowballing strategies, you’ll have a much better chance of getting your home at your preferred price.
Offer To Handle Repairs And Closing Costs
When buying a home, the buyer and seller usually negotiate who will pay for repairs and closing costs. Most buyers who make higher offers will try to convince the seller to pay these expenses. That means if you’re planning to make a lowball offer, you can make your offer more attractive by volunteering to foot the bill.
Arrange for an information-only home inspection, so you know what needs to be repaired, and then, if the repairs are within your budget, offer to cover the costs. Usually, the seller will cover closing costs – like brokerage fees.
But if you’re low-balling, you can offer to pay these costs to better compete with other buyers.
Include An Escalation Clause
If you make a lowball offer on a hot ticket property, it’s a virtual certainty that you’ll be outbid. And although a straight lowball offer won’t win you any points with the seller and will undoubtedly cause you to lose a bidding war, you can put up a fair fight for the home by including an escalation clause with your offer.
Essentially, an escalation clause is a clause in a real estate offer that increases the amount of your offer in the event that you get outbid. For instance, if you offer $300,000 for a home and you have a $2,500 escalation clause, you’ll pay up to $2,500 more than the highest competing offer, up to a maximum value that you decide. So if another party offers $350,000, your $300,000 offer will automatically increase to $352,500.
Know The Home’s Fair Market Value
In real estate, knowledge is power. (Click here to access our real estate knowledge base for home buying)
Some overzealous sellers will try to get more for their property than it is actually worth. This isn't necessarily out of greed but out of sentimentality. And if that’s the case, then low-balling can work quite well if you’re armed with hard facts and statistics.
For this to work, you’ll need to dig up home sales statistics over the past year for the neighbourhood where your potential new home is located. You’ll also want to get an independent appraisal to determine how much the home is objectively worth.
If the seller is asking for more than fair market value, you can back up your lowball offer with sales statistics and make a strong case that they’ll have a very difficult time getting what they want for the home. Making a lowball offer isn’t easy, but it can be successful if you use the right strategies.
With an Edmonton real estate agent on your side, you’ll have an expert negotiator who can help you get your new home for below the asking price. And when you successfully lowball a property, you’ll have plenty of extra money left over to make it your own.
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This post was first published in 2015, but it was updated in 2021 just for you.