When writing an offer, the the seller will look at price first and price can either make or break negotiations. This article illustrates how to determine a fair price.
As important as it is for sellers to price their properties appropriately, it is also important for a buyer’s negotiation strategy to write an offer at an appropriate price. While there are several things to consider in making an offer, sellers eyes often shoot straight for the price. So how does one go about determining the best price? Read below for more.
Don’t “Low Ball”
One huge mistake a homebuyer can make is to smack a seller in the face with a low ball offer. Of course, what constitutes an extremely low offer is up to interpretation and may vary depending on the price of the home. For example, offering twenty thousand dollars lower on a million-dollar property is more acceptable than offering twenty thousand dollars lower on a hundred-and-twenty- thousand dollar property.
What can happen when a buyer tosses out a low ball offer? The greatest affect it has is on the seller’s perception of the buyer. It will either make the seller so angry that he or she returns with a full-price counter, or it will make the seller doubt the buyer’s credibility, ability to purchase, and seriousness about the transaction.
Get a Comparative Market Analysis
The best way to determine what price to offer is to work with a real estate agent. Real estate agents can help negotiate a fair price for a buyer by completing a Comparative Market Analysis, also known as a CMA. This shows effectively what other buyers have paid for similar properties in recent months and gives an idea of the homes market value. Of course all CMAs have their limits in that some houses have extreme enhancements that give them an edge, or repairs that need to be made that will lower the value of the CMA.
Explain The Offer
If working with the real estate agent, buyers may ask him or her to be the ones actually presenting the offer to the seller. In some areas this is very common, in others, it is completely unheard of. Regardless, if a buyer wants to get across the reasons behind the lower offer, an explanation of such either verbally or attached with the offer in writing can help to do that. It can be as simple as:
“Mr. Seller, thank you for allowing me to view your home and for reviewing this offer. Please understand that in this offer, I have taken into account the electric baseboard heat and lead piping that needs to be replaced.”
