Bargain Smartly to Get the Best Deal

Bargaining is an art, particularly when the buyer wants to make a rock-bottom bid without insulting the seller.

In this slowing market with dropping prices, sometimes buyers get the idea that all properties on the market will go out at give-away prices, and then proceed to make offers to purchase that are 20% or lower than list price.

This is generally not a winning strategy. In fact, it often shows an immaturity in the marketplace if not an inability to deal with market realities. Most often the buyer is just shopping in a price range above what they can afford. Agents who write these types of offers show a lack of respect for the sellers, the other agents, and first and foremost, their own buyer. In order for the average seller to consider working with the offer, if only to make a counteroffer on price and/or terms, the offer has to be in some way palatable and shows you've done your homework on price comparable sales and/or seller motivation.

Sometimes an unreasonably lowball offer can make a seller so angry they won't make a counter offer or deal with a buyer. Adios is the best word that can describe the reaction, although other words are often said.

This is not to say that there aren't deals to be made. There are. Seller motivation plays a key role in price negotiation. Distress sales or time-specific needs top the list of homes that would be potentially great to make a low-ball offer on, but not all homes on the market are in these categories. Bank-owned properties are generally priced at the very lowest tier of comparable properties, and in a slowing and declining market the institutions don't want to keep them for very long. Unsold inventory costs the servicing companies money. But neither do they give these properties away. After all, they are in business also. Some people tout short sales as buyer opportunities, and sometimes they are. However, in the vast majority of cases, either the list price as a short sale is just so unreasonably low for the bank to consider and is in effect a 'teaser price' just to get people in the door, or the seller is not in a legitimate distress situation financially, in which case the lender will proceed with foreclosure and deny the short sale. This last situation is particularly prevalent in our area, where people think they can continue to game the system to their advantage.

But getting back to making offers on properties...

Here are their suggestions for coming up with a number that is competitive and compelling.

-- An offer that is more than 10 percent off the list price isn’t customary and is likely to be rejected.

-- Understand that there are other attractive homes on the market and don’t be shattered if the sellers reject their lowball offer. Move on.

-- Recognize the home’s strengths as well as its weaknesses.

-- Make a list of reasons to share with the seller for offering less than list price.

-- Instead of asking for the price to be lowered, negotiate other tangibles such as repairs, closing dates, and closing costs.

Treat others as you would want to be treated. Buyers should be respectful whenever he or she is around the sellers. Sellers, rather than getting upset about the offers that are made, should be concerned about all of the potential buyers who see their home, and then choose not to make an offer. Realistic pricing up front is the best way to negotiate a successful sale.

Some of the material for this piece was developed from an article by
Source: Star-Tribune, Lynn Underwood (11/17/07)