How to make a low offer with out insulting seller?

Question

Hello everyone,

So I am currently looking at a house that is a 2 family listed around $600k. I have ran comps and my investing metrics and the property seems like a decent investment if I can get it around 520k I’m considering offering about 480k and seeing if they counter. The other day my real estate agent was on the phone with the listing agent and I heard him say the sellers probably wouldn’t entertain any offer with out a 5 in it meaning $500k and up. He also stated the only offers they were receiving had been in the low $400k range.

Any experienced negotiation tips will be appreciated!

Thank you all!

Abel Curiel · Answer

Hey @Nicholas Mann

Submit your offer along with:

-comps

-pre-approval letter

-proof of funds

-proposed date of inspection (if applicable)

-attorney info (to show you're ready for the contract phase)

Offer price doesn't always dictate a strong offer, its showing them that you are serious and ready to move forward.

That being said, if you know this could sell for 520K and that # makes sense to you, I wouldn't go too far below that # in hopes of getting a counteroffer.

Best of luck to you moving forward!

Abel

Jacob Sampson · Answer

I don't think you should be worried about offending.  This is a financial transaction.  You define what it is worth to you and offer.

Jacob Sampson · Answer

I also agree with @Abel Curiel.  If it works at $520k then offer around that number and don't budge.  Nothing says you have to let them talk you up.

Eric M. · Answer

Well I wouldn't worry about it. If they have gotten offers in the low 400's they aren't going to be insulted at 480K.

It depends what they mean by won't entertain. If you think that means they won't accept it, that doesn't matter. If you think it means they won't even counter, then offer 500 and go from there.

It is not complicated and rarely will you be able to undo any hard feelings so just go with your plan. If they ignore. Come back with another offer or walk away.

Don't let them dictate your strategy. Work your plan. If they accept, fine. If not, on to the next.

David Martin · Answer

@Nicholas Mann pretty much @Abel Curiel has it covered here... your other option here is to throw two realities at them... one in which they get a comfy number, but on terms you like, so maybe $580k, but they do a seller carryback for a monthly rate of significantly less than your current financing options are giving you so that you cashflow heavy immediately, or $480k on traditional finance.

Stephen Keighery · Answer

@Nicholas Mann Never split the difference is an excellent book on negotiations.

Andrew Syrios · Answer

Be respectful and don't be pushy. Offering some justification for your low offer (i.e. necessary repairs, comps, etc.) before you make it can help soften the blow as well as if you note up front that you are an investor and what you offer are quick, easy closings for cash (or something like that), not price. That way they don't expect a high offer. Yes, they'll still be disappointed many times. Occasionally they may even be angry. But as long as you respect their response and don't get pushy or defensive, they should cool down very quickly.

Brian Formulak · Answer

You have to be disciplined with the offers that make sense for you. However, when negotiating you should try and build rapport with the seller and be strategic with how you go about it. I believe negotiation is one of the most important skills in all of the business.

Mike Cumbie · Answer

Pretend you are the agent for the seller. Your seller wanted to list at $600,000. Lets say you really thought it was worth $500,000 but they refused to even think below a starting listing of $600,000. OK an offer of $480,000 comes in after a few months. Do you

1) Suggest client take the $480,000 offer and a $120,000 loss in their eyes

2) Suggest they lower the price to $570,000 to see if we can get some renewed interest at a $30,000 price drop.

if you are the seller which option above do you like better? I have no problem offering lower (or people offering lower on my listings), in fact it often helps to make my case to a client we need to lower the price as we are out of what the market wants to pay. Expecting them to actually take the price is a different story though. If a bunch of low 400's came in hopefully yours is the one that brings them down. Having any expectation that they will jump on a 25% price reduction over a price drop is something I have not seen. Am I saying you can't get them much lower? No, they just usually are not listed properties in my experience. They have to be off market gems.

Just my 2 cents

Joe Splitrock · Answer

I see the thought process here. You figure offer $480 and they will counter at $540 and then you counter at $520 and the deal is done. In a normal negotiation it is common for splitting the difference back and fourth.

The risk here is you are below the $500K "psychological barrier". There is a barrier at the $100K marks, $50K marks and $10K marks. If you are in the $400's, they may just quickly dismiss the offer. If you are in the $500's and all the offers before were in the $400's, then they will psychologically see it as a much improved offer. As strange as it sounds, $499K versus $500K is a huge mental barrier, although it is only $1000.

I would offer $511,223 for the property. I know it sounds like a strange number to offer. Who would go to the effort of offering such a specific number, other than someone who had a specific reason. When you throw out offers that are round numbers, they appear to be low ball stabs. When you get specific, it makes the offer appear much more legitimate. Tell your realtor that you have a detailed break down of comparisons, repairs, etc. and this is your number you can afford. Don't even tell your realtor why you proposed such a strange number. You want your realtor to be convincing when they sell it. If you have to go higher for a counter offer, tell your realtor you padded in $5000 on your offer. Tell him you want the house, but that is all you can do.

How to make a low offer with out insulting seller?

Most Popular Reply