Understanding the strategy behind making an offer on a home is one of the most difficult parts of negotiating, and one that can cost you a lot if you don’t get it right from the start. Many buyers will simply throw out a low offer and hope that the seller bites. The problem is you might end up paying more in the end, or lose the property altogether if the seller decides you’re not serious. On the other hand, you don’t want to offer more than you have to, and you want some room to negotiate. So how do you figure out a good starting point?
Rather than playing a guessing game, the better approach requires a bit of research. Based on an analysis of what the property is likely worth, an opening bid should be based on how far away the seller’s asking price is from ‘fair’ value.
If the seller’s price is far above fair value, the seller probably has an unrealistic idea about the value of their home. By showing them that similar homes have sold for much less, I can try to get them to take a much lower offer.
If the asking price is aggressively priced, you’re likely dealing with a highly motivated seller. It’s crucial to be ready to act on these opportunities or you may miss out to someone else who recognizes the value in front of them.
If a property is priced near fair value, you may still have some negotiating room. But getting the best price and terms requires a strong understanding of negotiating strategy.