How To Effectively Offer Below Ask
Getting a low-ball offer accepted is every homebuyers dream.
When you are planning your offer under ask, are you doing it strategically or are you shooting from the hip and offering what ✨feels✨right? Winning the perfect house at a price that feels like a 'steal' is rare in today’s market and if you’re going to try it, do it right!
A couple things to keep in mind. When your market is soaring and homes are selling at and above list price by thousands of dollars, it will be a waste of your time to offer well below on hot-ticket homes. Your REALTOR® will be vital in determining whether a home will be worth the low-ball try.
Here's how to EFFECTIVELY offer below asking price in today's (or tomorrow's) market:
Approach your offer price like an investor would!
Find the ARV (after rehab value) - you NEED your realtor to help you with this! Have them find out how much the home would be worth in it's best condition. Why is this important? Because the seller may have already taken those things into consideration when approaching their listing price!
Calculate approximate cost for improvements. You can not do this alone. Your realtor is also not a contractor, roofer, subfloor repairman, etc. You can come to this conclusion through google searches, by sending your ideas and pictures to a contractor, having a second viewing with a trusted contractor, etc.
Subtract the improvements cost from the ARV and use that as your starting point for deciding your official offer.
A few things to keep in mind when considering what an "improvement" is:
Focus on systems and construction. Roof is 37 years old? Calculate it. HVAC looks like it's rusted through? Calculate it. Paint is SO 2003? Consider not calculating it. (more below)
Look at the home through the lense of the neighborhood, not through the lense of your specific needs. Of course, your needs matter, however - if you are trying to turn a 3 bedroom 2 bath home into a 4 bedroom 3 bath with an office, that's a problem of your expectation on the house, not a problem the house realistically has. Sellers are marketing to the general buyer, not trying to cater to your specific needs if they're outside of the scope the home can provide.
Cosmetic updates are objective. No one likes a Tuscan Kitchen anymore, Karen. But that doesn't mean that you should reduce the list price 40k for a kitchen reno to match your tastes.
One of the most challenging clients a REALTOR® can have is the one who wants to transform a home into something completely different and try to put that cost on the seller. I imagine television shows that gut and completely renovate the inside of every home they look at have given homeowners the impression that all homes require WORK to get them where you want them.
A huge portion of your REALTORs® job is to check the price of the home and see where the comps lie. Has the seller already taken into consideration that the windows need repair and reduced for it? If you assume that list price is the market’s top dollar and start chunking off dollars without realizing they’d adjusted for it already - you’re not going to look very smart and they’re not going to be as likely to work with you to put together a deal.
If you're looking to make an offer over or under the list price, make sure you're working with a professional who can help you make a strategic choice! If you’re in Middle Tennessee, I can help! If not - I can help you find it.
