Shrewd buyers eager to get a home for a song have to be willing to play real estate limbo – just without going so low that the delicate dance of negotiations comes to a halt.
So when it comes to making a low offer on a desired home, how low is “too low?” The answer depends on the property and local market, said Mark Madden, agent with The Madden Team at Century 21 Commonwealth in Boston.
“In our market, lowball offers are more likely used when a property has lingered on the market and become stale because it was overpriced from the beginning. But there is a point when a buyer’s lowball offer attempts can be very insulting and unrealistic in the minds of the seller and, often, the seller’s agent.”
Riccardo Ravasini, managing agent at Charles Rutenberg Realty in New York, says he would recommend a starting offer at about 17 percent below asking price, on average, on a privately owned home; for a new home development residence or bank-owned home, he suggested asking as low as 28 percent below asking price.
“Rather than just throwing a number out there, the best strategy consists of making a compliment, explaining why the offer is much lower than the asking price, and eventually offering something of value,” says Max Dufour, principal at SunGard Consulting Services in Boston.
While you don’t want to completely disgust a seller with an unreasonable first offer, you actually want your first offer to not be accepted, said Ravasini. If the seller accepts your first offer, that may be a red flag that there’s something wrong with the property.
“Always try to be realistic and don’t go too low at the beginning,” Ravasini says. “The seller needs to feel that you know what you are talking about, so he or she will take you seriously. Plan on a three- to four-step negotiation, be determined, and get straight to the point.”