Do you know the difference between cost, price and value?
When it comes to the real estate transaction, a low ball offer is probably one of the worst things that you can deliver when you come up to bat.
Facing the Consequences
Low balling an offer to the seller or landlord usually has grave consequences. No matter the financial position of the seller or landlord, right off the bat, you risk insulting them. The most common responses are to counter the offer at the original full price, refuse to counter, or for the transaction to become a series of balls and strikes with multiple counter offers, usually ending in someone fouling out. The buyer or tenant may eventually get the price that they want, but the cost will be the loss of goodwill in the transaction and more.
Setting the Stage for the Duration
Once woundedness occurs, it is very difficult for that change and for the wounded party to recover. This is also true with bank committees representing short sales and foreclosures who have no emotional attachment to the home because they are managed by people with emotions whose work environment and nature of the transaction tends to create high stress situations.
Once ill will is established in the transaction, it can promote breakdown in other areas such as negotiation for repairs or lease renewal or extension.
Questions to Ask First
Before you make that low ball offer ask yourself a few questions:
- Do I really understand the cost of my low ball offer?
- Is my offer based on similar nearby homes that have recently sold or leased at the same condition, type, and price range?
- Would I want a buyer or tenant to do the same thing to me if I were in his shoes?
- What is my REALTOR recommending?
- What is my plan B if this doesn’t work?
You Make the Market
After you have sincerely considered the questions and are comfortable with the possible outcomes, go ahead and make your best advised offer. Until you make your offer, even if by necessity low due to property condition, market conditions, and recently appraised values, you never really know what might work for the other party. However, be advised. What you pay will become your very own comparable for your future appraised value certainly for the next 6 to 12 months establishing your own neighborhood market price. And you’re sure to become the talk of the next neighborhood bar-b-q, having established a downward trend for neighborhood values for everyone for months or even years to come!
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Chrystal is a REALTOR® and principal of The Safari Group, a local, homegrown real estate firm, specializing in all phases of the residential and small business real estate market. Celebrating over 20 years in tenant procurement and rental portfolio development, and over 13 years in general residential brokerage in the Charlotte Metro Market, Chrystal offers guidelines to assist tenants, home buyers and sellers in evaluating today’s real estate market for maximum leverage. In the TOP 5% Nationwide for closing the transaction with Estately, Inc, a national referral company, she can assist you with all your real estate related needs. Contact her today for more at 704.562.1030 TXT/PH or Chrystal@TheSafariGroup.com Join the conversation on Facebook https://www.facebook.com/TheSafariGroupRealty