When Should You Make a Lower Offer on a House?

When Should You Make a Lower Offer on a House?
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Published By Jennifer Jewell

Question: When Should You Make a Lower Offer on a House?

Answer: You may consider making a lower offer on a house if the property has been on the market for a long time, if there are significant flaws or needed repairs, or if similar properties in the area have sold for less.

When Should You Make a Lower Offer on a House? When is a Lowball OK?

House hunting can be exhilarating. You envision yourself curled up by the fireplace or hosting barbecues in the backyard. But excitement can cloud judgment, especially when it comes to making an offer. So, when does a lower offer on a house make sense, and when is it better to stick closer to the asking price?

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Understanding Market Conditions

The real estate market significantly impacts your offer strategy. In a buyer’s market, with more houses for sale than interested buyers, there’s more room for negotiation. Sellers might be more receptive to lower offers, especially if their property has been on the market for a while. Conversely, a seller’s market, with high demand and limited inventory, might necessitate an offer closer to the asking price to be competitive. [ 1 ]

Click here for more information on home values in Alliston
Related Article: Does a Home Seller Have to Accept a Full Price Offer in Canada?
Related Article: Can You Ask a Seller Why They are Selling?

Reading the Signs: Property Specifics

The property itself can also send signals about the appropriateness of a lower offer. Here are some key factors to consider:

  • Days on Market:

    A house lingering on the market for weeks or months might suggest the seller is motivated to sell and may be open to considering a lower bid.

  • Condition of the Property:

    A home requiring significant repairs or renovations presents an opportunity to submit a lower offer that reflects the additional costs you’ll incur.

  • Recent Sales in the Neighbourhood:

    Research the selling prices of comparable properties in the area. If the asking price is significantly higher than recent sales, it might justify a lower offer.

Beyond the Surface: Unveiling Disclosures

A seller is required by law to disclose known issues with the property. A close examination of these disclosures can reveal problems that necessitate repairs, potentially justifying a lower offer. For instance, a leaky roof or faulty foundation can be expensive to fix.

The Power of Leverage: Pre-Approval

Obtaining pre-approval for a mortgage strengthens your offer and provides leverage during negotiations. Knowing your borrowing limit allows you to craft a realistic offer and avoid exceeding your budget. Pre-approval demonstrates to the seller that you’re a serious buyer with the financial means to back up your offer.

Negotiation Strategies

If you decide to submit a lower offer, it’s important to do so strategically. Here are some effective approaches:

  • Be Prepared to Justify:

    Have a clear explanation for your offer price. Use the factors mentioned above, such as market conditions, property condition, or recent sales data, to support your reasoning.

  • Leave Room for Negotiation:

    Don’t submit your absolute bottom line offer. Leave some wiggle room for negotiation to reach a mutually agreeable price.

  • Work with Your Agent:

    Your real estate agent is a valuable resource throughout the negotiation process. They can guide you in crafting a compelling offer, present it effectively to the seller’s agent, and advocate for your best interests.

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Knowing When to Walk Away

While a lower offer can be a successful tactic, it’s important to be prepared to walk away if negotiations reach an impasse. Don’t get emotionally attached to a property and overspend beyond your budget or comfort zone. There will be other opportunities, and your agent can help you continue your search for the perfect home.

Ultimately, the decision of whether to submit a lower offer is a personal one. By considering the market conditions, the property itself, and your financial limitations, you can make an informed choice that strengthens your position in the negotiation process.


References

1. https://www.realtor.com/advice/buy/how-much-below-asking-price-should-you-offer-on-a-house/

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