There are as many ways to make offers on properties as there are properties, but some rules typically apply across the board.
You’ve driven around and looked at roughly a gazillion properties. You’ve done your homework and narrowed down the choices. Now what?
I like to think that the first rule is to never fall in love with a piece of real estate.
No matter how nice the view, no matter how perfect the location or how glitzy the bathroom, do not fall in love with any property ... at least until you own it.
With that in mind, start thinking about each property and what you think it is worth. It doesn’t matter what the seller thinks, it doesn’t matter what the seller’s real estate broker thinks and it doesn’t even matter what your real estate broker (if you’re using one) thinks.
You, and you alone, will pay the bill, so you alone must decide what its value is.
Before making any offers, it helps considerably to have looked at many properties. You’ll be in a better position to have a “feel” for what is on the market and at what price.
It also helps to spend ample time looking. Some people get impatient, especially when they see properties that they’ve looked at get sold.
Don’t fall into this popular trap of thinking that “all the good ones are getting sold;” the reality is there will always be more. In fact, witnessing properties that you’re familiar with get sold is actually a good thing, as this will greatly help to fine-tune your feel of what other buyers think properties are worth.
Next, don’t be afraid to make several offers on different properties at the same time. Just disclose this on each offer with the proper language, prepared by your attorney.
This technique alone puts you in a strong position to deal with sellers, people who are painfully aware that this is a brutal buyers’ market.
Making several offers can also allay your tendency to feel like you’ve only got one choice – a feeling that would put you at a definite disadvantage.
So the time comes to ink the offer. How much? Well, before we get to this all-important part of the buying process, allow me to make three suggestions governing the process: Negotiate hard, clean and only once.
Negotiate hard: By this I mean don’t be afraid to make very low offers. This is a true buyers’ market and you’ll never know for how little you can buy a property unless you try. Aim high by offering low.
Negotiate clean: Some buyers think they’re pretty slick by implementing tactics that are anything but clean. I’m not going to delineate the wide variety of these, but please keep your negotiation clean. “Used-car-sales” tactics don’t suggest high sophistication, but low character.
Negotiate once: After a hard and clean negotiation, you finally got the seller to see it your way. To a great extent they’ve acquiesced and you now have a signed contract.
Certainly you’ll want to employ due diligence, but if, say, your inspections reveal a leaky faucet, for example, don’t get petty. You’ve beaten-up the seller once already and now is the time to take the high road. Pettiness is not a sign of savvy negotiating, but one of the seven deadly sins.
So how much should you offer? Because every situation is unique and has a multitude of complexities, it is impossible to say what you should offer. However, allow me to give you an example.
Recently, I was involved in making an offer on a property with an asking price of $339,000. We offered $225,000. The seller’s broker said we were crazy and said the seller was “offended. They rejected the offer. Whatever.
After a couple of months, the seller’s broker called and asked if we were still interested. Yes, we were – at $225,000.
The seller said we could buy the property for $275,000, and we declined. A couple of months went by and the property finally sold for $300,000.
Though they’ll never know it, those buyers left at least $25,000 on the table.
If it is the right time for you to be a buyer, you owe it to yourself to get the best deal you can while being the best person you can. Enjoy your piece of paradise.
Jeff Popick holds a Florida real estate license, mortgage broker license and general contractors license. For questions or comments you’d like addressed, write to him at email@example.com.