Avoid Making Low Ball Offers - And How to Handle One that Lands in Your Lap

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So many sellers these days are finding themselves in a quandary when they take a look at the offer they receive on their home.  The prevailing question among them is, “Why are the buyers trying to beat us up?  We’re not all in distressed sale situations!”  With the market the way it has been lately, it’s no wonder that buyers feel they can step all over homeowners selling their homes.  The process of making and accepting an offer, no matter how low it might be, can be managed tastefully however, by following these guidelines for both buyers and sellers.

Steps To Take Before Making An Offer On a Home

Find out what kind of sale it is.  If the property is being sold as a short sale or foreclosure then you might handle it differently than if it were a regular re-sale where the seller is not in a distressed situation.  It’s important to be careful of not offending sellers that may just be looking to move up into a better home by making an unrealistic offer on their home.  By doing so, you can risk losing the house if the sellers choose not to entertain your offer at all.

Learn whether other buyers out there have made any offers on the property you are considering.  The presence of one or more additional offers drastically impacts the likelihood of success when it comes to providing a winning bid on the home.  Consider whether losing the sale is a risk you are willing to take by making too low an offer.

Be prepared with documented knowledge of the home’s true assessed value. When you go to make an offer this will have a significant impact on the viability of your offer when you can corroborate the amount with the current assessed value of the home.  It is important to do so based on comparable, like-kind properties located in the same vicinity.

Make sure a prequalification letter, demonstrating that you are a serious contender for the purchase of the home, accompanies your offer.  When sellers see that a lender has reviewed your application and is willing to entertain your loan, they will likely take your offer to heart and continue with negotiations.  Sellers now often prefer to deal only with prospective buyers that have a prequalification letter on hand at the time of making an offer.

Communicate the reason for your offer if it is substantially lower than the asking price.  Many times potential buyers make lower offers as a means to compensate for repairs that may need to be done or to accommodate other things such as purchasing new major appliances. Sellers do appreciate the need for a home to be move-in ready and when any repairs that may be needed are documented and supported with quotes from contractors, the offer then makes more sense to the seller and reasonable negotiations can begin on that basis.

What To Do When You Receive a Lowball Offer

It is important to keep in mind that given the soft market we are experiencing right now, there are less buyers vying for more homes so they will try to get the best deal possible.  Try not to take it personally, rather handle it professionally by discussing with your agent how to respond to the lowball offer.

Any offer received is a good offer.  Since negotiations begin with that very first step – an offer should be viewed by the seller as a starting point.

Buying and selling real estate is purely a business transaction and it should be treated as such.  It is not anything to be offended about.

Keep in mind that a sale is not possible without negotiations and negotiations are not possible without an offer.  So when an offer is presented, it’s a good thing.

The process of selling (and buying) a home is like a rollercoaster ride.  It is important not to get too disheartened if a low offer is received.  As with the many ups and downs that can occur during the process, it is usually something that is overcome in a way where all parties are satisfied.

Do not underestimate the power of making a counter offer.  Not only does it communicate to buyers that you value your home and believe you have priced it effectively, but it also brings to light just how serious the buyer is about purchasing the home.  Believing that the prospective buyer is not realistic or serious can hinder your chances of securing a successful sale.
The key on all sides of the fence is communication.  As long as there is an open line of communication between all parties – no matter how low an offer may be, if it is the right home for the right buyers, the sale will most likely happen.  Happy negotiating!

How to Be a Wise Home Shopper

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There’s no doubt about it – there are a great many bargains in the real estate market today if you’re a person looking for a new home. However, we highly recommend that you don’t get dazzled by all the opportunities and make a potentially expensive and poor decision. To that end, I’d like to offer you some common-sense guidelines to follow.

Guideline 1: Pay Attention to Your Budget
Before beginning your search for that new home, sit down and come up with a monthly payment you can handle with ease and then look for the house that fits that budget.

Guideline 2: Save Up for a Down Payment
There are still programs for low and no down-payment. Minimums are at 3% for Conventional, 3.5% for FHA, Zero for VA and/or USDA. As always, the more options and more-attractive terms, and the less a buyer puts down, the less options amd less-attractive terms.

Guideline 3: Improve Your Credit Score
A good credit score is a great way to make the whole process easier when you apply for a loan. Today’s lenders scrutinize such scores more closely today than in the past. If you don’t have a good score, work hard to get it up into an acceptable range. It’ll save you money on interest charges and down payments in the long run!

Guideline 4: Get a Pre-Approved Mortgage Loan
If you’re a first-time home buyer or simply a buyer who wants to make sure you stay within your means, it’s a wise idea to get a pre-approved mortgage.This is simply the process of applying for a mortgage and getting approval for the loan prior to buying a home.

A “pre-approval” is an indication that the lender is ready to extend a mortgage to you once you’ve located the right property.  And it has several benefits. First of all, it saves time and energy. Once you have a pre-approved loan amount, you’re required to stay within the limits of that loan in terms of the price you’ll pay for a house.

Why will pre-approval help?

- First, when working with a realtor, ask him or her to limit the choices to those stated in the loan. This prevents the agent from showing you properties which are out of your range. By the way, they’ll really appreciate those parameters because it’ll help them zero in on properties with the best chance of sale! 

- Second, you can spend more time looking at homes you really like and, simultaneously, not wasting time on houses that aren’t within your budget. This allows you to focus on the details of the homes you do like in order to make sure you select the right one; for example, kitchens, baths, garages, etc.

- Third, you can bargain more effectively with sellers once they know you’re pre-approved. In the current market, that’s a great relief for many sellers because they realize they have a reasonable certainty of selling their property when working with a pre-approved buyer.

- Fourth,
 you can close faster with a pre-approved loan because there’s no time lost in the usual processing period for loans. For example, an appraisal can be ordered right away, and you have the potential to cut a 30-day closing to two or three weeks.

- Finally, the seller will prefer to deal with you, particularly if he or she needs to move quickly.

Now, you have some common-sense guidelines to follow when seeking a new home in today’s market! You can learn even more by contacting us today.