Home-Buying Offer Strategies

Buying a home is an emotional process. You must, however, stay calm and keep your emotions in check. It's extremely difficult to negotiate a satisfactory deal when your insides are out of control. And opening up negotiations is exactly what you're doing by submitting an offer on a seller's house. Being aware of the local housing market as well as personal circumstances (both yours and as much of the seller's as you can discover) can greatly help you determine the kind of offer that you should make. There are a number of different strategies to choose from, depending upon the situation you find yourself in:

The lowball offer. If you're house-hunting in a buyer's market and are not emotionally committed to the house you find, you may decide to make a lowball offer. A lowball offer is one that's usually way below the asking price. It may succeed if the seller is highly motivated. Sometimes the seller will counter, but oftentimes he or she will simply ignore this type of offer (and occasionally become offended by it). You definitely should not make a lowball offer in a seller's market or if you really do want the house.

The anxious offer. If you feel that you won't be able to live without the house, then consider making your best offer first. This strategy leaves no room for negotiating, but it might be necessary in a seller's market in which homes aren't on the market for very long. Be sure that you (or your agent) convey to the sellers that this is your best offer. If the market isn't setting any sales records, you may not want to make your best offer first. Most sellers expect to receive an offer, counter it, then receive another offer; in other words, they expect negotiations to go back and forth.

The bidding war offer. In a seller's market, you may find yourself bidding against other buyers for the same property. When this happens, you lose all of your negotiating strength. You either have to raise the bid or fold and move on to the next one.

The negotiable offer. In most cases, the best offer is the one that leaves room for negotiations. Plan ahead of time what you want to offer first and what you're willing to go up to. If you're working with a buyer's agent, he or she can help you with this strategy. If, however, you're working with a seller's agent or subagent, always keep in mind that this person does not work for you and is required to pass along all information that he or she receives. If you tell the seller's agent that you can go higher, the agent must let the sellers know this. The negotiable offer is meant to provide a starting point in the offer-counteroffer process.

The counteroffer. If the sellers make some changes to it, they'll return a counteroffer. This is usually a good sign – at least you know that your offer was seriously considered. If you decide to make some changes to their counter, you then make another counteroffer. And so it goes until, hopefully, an agreement is reached.

Keep in mind that everything in real estate is negotiable. The seller may ask for more, or may say no to what you asked for, or may ask for something else. For instance, the seller may ask for a higher price or say no to your request to pay closing costs. Or they may agree to the offer but ask for a different closing or occupancy date. You should look over the counteroffer carefully and be sure that you understand any and all changes.