The current market is seeing an increase in home prices and sometimes I have buyers asking me if it is possible to offer below asking price. Theoretically, yes it is possible to offer below asking. However, in the seller’s market we currently find ourselves in, this offer is highly unlikely to be accepted. We are generally seeing buyers offering over asking in a bid to have their offer accepted. Making an offer on a home is a strategic move and you need to have a good understanding of the market to make sure that your offer above or below the asking price is appropriate. But the market will not always remain a seller’s market, and there are always exceptions to the rule.
When Is It Acceptable to Offer Below Asking?
Your real estate agent is always the best guideline to use for this information and I would recommend you review the market data with your agent and obtain their insight. However, there are a few scenarios in which it may be acceptable for you to offer below asking. Firstly, you need to understand the situation the seller is in. If a seller is desperate to sell and just wants the whole process to be done as quickly as possible, they may be more likely to accept an offer below asking. Similarly, if a home has been sitting on the market for a long time with little to no activity, it could be worth making an offer below asking and see how they respond.
Another reason it may be acceptable for you to offer below asking is if the home needs major updates or repairs. If the home is priced much higher than other comparable homes in the area, you may also consider offering under asking. But be aware that a seller with an overpriced home is usually unlikely to accept an offer below asking, even if it is very reasonable. In any of these scenarios it will be very much up to the seller and their real estate agent whether they accept your offer or not.
Again, it’s highly unlikely that in the current seller’s market your offer would be accepted. But if you’re not in a rush to buy and would prefer to take the risk and save some money, it’s certainly possible to try. If the market changes in the next months or years however and turns into a buyer’s market, then it would be much more acceptable to offer below asking. In this case your offer would be much more likely to be accepted as well.
How Much Below Could You Offer?
When you decide to offer below asking price, you still want your offer to be reasonable. If you offer very far below the seller might be offended and won’t even look at your offer. Offering 20% below asking price would only ever really be done in a buyer’s market and if the home needed significant repairs. If there are only minor updates and you’re in a buyer’s market 11% to 19% might be acceptable. 5% to 10% below asking could work if the home has been sitting on the market for a while with minimal or no interest. Some listing agents automatically list a home above market value because they assume a buyer will negotiate down. This could work in your favor.
Offering 1% to 4% below asking might not seem like a lot, but if the home is listed for $1.5M then that could still save you $15,000. This kind of offer might be accepted if you are offering all cash, or perhaps waiving a home inspection in an effort to be more competitive. If you’re not sure what percentage below asking you should offer, you can also look at the market trends and look at the average percentage difference from asking to closing price. This is usually a good indicator of what kind of market you are in and how much over or under you should be offering. I include this data in my monthly Summit and Park County market report if you are interested in seeing what the market is like currently.
Overall Advice
Making an offer below asking price in the current seller’s market is something that should be evaluated on a case by case basis. With inventory on homes low and demand high, you will be competing with a lot of other offers and offering less than asking will almost certainly get your offer rejected. In the end it’s up to you however, and it depends on how much you want the home. If there are other circumstances, like the home being clearly overpriced or sitting on the market for a long time, it might be worth a try. But if you have truly found your dream home and want your offer to be the one that the seller accepts, offering below asking price is not a strategy I would recommend.
How Can I Help?
Do you have any further questions about making an offer or offering below asking on a home? I would appreciate being a part of your buying experience. If you are needing buying or selling guidance or help in the Summit or Park County area please reach out. I will also continue to provide you with relevant and up-to-date information.
If you would like more information on how the Summit County Area Real Estate Market is doing, you can also sign up for my detailed monthly market report by clicking this link.
Best Regards,
Scott M. Lindblom
Associate Broker
Coldwell Banker Mountain Properties
(970) 485-4065
[email protected]
www.lindblomgroupe.com