How to Make an Offer on an Overpriced Home
There are some common real estate pricing mistakes that some homeowners make for a variety of reasons when selling their home. Whether it’s because a seller is greedy or because they don’t believe the facts, buying an overpriced home can be quite difficult. Just because buying an overpriced home is difficult, doesn’t mean that it’s impossible. There are certain tips that should be followed when buying an overpriced home. Making an offer on an overpriced home must be done carefully if you want to be successful.
Hire A Buyer’s Agent Who Knows How to Negotiate
It’s very important when buying a home that you have a buyer’s agent representing your best interests for a variety reasons. One of the most important reasons is because they are going to be responsible for negotiating on your behalf.
When attempting to make an offer on an overpriced home, it’s vital that you’ve hired a buyer’s agent who knows how to negotiate on a home that is overpriced. One of the best interview questions to ask a buyer’s agent is what their experience is with negotiating on an overpriced home.
Since not every home that is listed for sale is priced correctly, it’s possible you may encounter an overpriced home, so being prepared for this potential situation is important.
Determine If the Home Is Really Overpriced
One of the top reasons why a purchase offer is rejected is because an offer is too low. Before deciding to submit a low ball offer on a home you feel is overpriced, you and your real estate agent need to first determine if the home is really overpriced or not.
There are several ways to determine if a home is really overpriced or not. One of the best real estate statistic to review to help determine if a home is overpriced is average days on the market. A top real estate agent is able to determine what the average days on the market are for a given real estate market. If a home has been listed for 90 days and the average days on the market in the local neighborhood is 30, there is a strong chance this is a good example of an overpriced home. It’s important to remember that the majority of real estate markets are different and that comparing average days on the market is not a guarantee a home is overpriced.
Be Prepared to Provide Supporting “Evidence” Of an Overpriced Home
When determining how much to offer for a home, especially an overpriced home, it’s important to have supporting “evidence.” One surefire way to have an offer rejected when making an offer on an overpriced home is to not include any supporting information to justify the low offer.
The most popular way to provide supporting information with an offer on an overpriced home is to include a detailed comparative market analysis, commonly known as a CMA. An experienced buyer’s agent will provide the sellers real estate agent with a detailed CMA to help support the low offer. A detailed CMA should include details on several recent comparable sales in the close proximity that prove that the home is overpriced.
Make Your Offer “Stand Out” In Other Ways
There are some home sellers who will not respond to a low ball offer, but not all of them! It’s important when making an offer on an overpriced home that you consider making your offer attractive in other ways, other than the price. Below are five great ways to make an offer on an overpriced home look attractive, even though the offer maybe low.
- Include A Pre-Approval – One of the best ways to make an offer on an overpriced home look attractive is by including a mortgage pre-approval. There is a difference between mortgage pre-approvals and mortgage pre-qualifications. If a seller is reviewing an offer they feel is low, having a pre-approval may help assure them that you’re a very well qualified buyer for their home.
- Provide A Strong Earnest Money Deposit – A buyer who includes a strong earnest money deposit (EMD), sometimes referred to as a good faith deposit, can make their low offer more attractive. If you’re going to be making an offer on an overpriced home, consider including a large EMD to make your offer more attractive.
- Be Conscious About The Number Of Contingencies – There are many real estate contract contingencies that a buyer has the option to include or not in their offer. Inspection contingencies, sale and transfer of title contingency, mortgage contingency, and attorney approval contingencies are just a few of the most common. If you’re making an offer on an overpriced home, it’s possible that if there are fewer contingencies there may be a greater chance an offer is accepted.
- Consider Seller Concessions as an Option – Some sellers have a number in mind that they want to get for their home. Another option to make an offer on an overpriced home look more attractive is offer a higher price but request seller concessions. It’s important to be aware that if you offer a higher price for an overpriced home that the bank still must complete their appraisal and the appraiser must agree that the sale price is in line with the market values.
- Make Contract Dates Appealing – Another good way to make an offer on an overpriced home look more attractive is by structuring the contract dates to appeal to the seller. Depending on the seller’s circumstances, they may need additional time to find another home or may desire a quick closing. It’s a good idea to have your buyer’s agent find out what the sellers plan is and structure accordingly.
Understand Things May Not Work Out
When making an offer on an overpriced home, it’s always important to keep in mind, things may not work out. With some home sellers, it doesn’t matter if one hundred people tell them their home is overpriced, they will not accept an offer even though it may be extremely reasonable.
If you’re buying a home in a seller’s market, you may want to consider even making an offer on an overpriced home. Since buying a home in a seller’s market often leads to homes selling quickly, wasting time making an offer on an overpriced home could cost you another home that is not overpriced.
Making an offer on an overpriced home is difficult, but not impossible. As you can see from the above information, there are certain things that should be done when making an offer on an overpriced home.
It’s always important to remember that some sellers, no matter what information they are provided or what people tell them, will not be willing to negotiate on their overpriced home. Keeping this in mind will reduce the disappointment that may come with an unsuccessful negotiation on an overpriced home.