A common topic among real estate buyers is whether or not they should offer a price that is much lower than the listed price. It's an interesting concept, but one that is not without its pitfalls. Submitting an offer is one thing, but getting the offer accepted is another thing altogether. Let's take a look at the different factors to consider:
1) Be Certain You Fully Understand Market Conditions
In a market like Vancouver and the Lower Mainland we are often faced with an inevitable reality – people really like living here. Sellers are more than aware of this, and are primed to take full advantage.
Looking at comparable properties in the area that have sold going back as far as two years (or further) will give you a good understanding of what the seller is expecting. Maybe they've already priced it low to encourage multiple offers or a quick sale? If that's the case, it's likely they won't even submit a counter offer.
As real estate agents we are very much held to account by what the market will bear, and buyers and sellers are not immune to this either.
2) Be Willing To Negotiate or Have Something Else to Offer
Starting with a low offer could be considered disrespectful or a bullying tactic. If that's the case, why not submit another offer slightly higher if you don't hear back from the seller? If the goal is to get the ball rolling on negotiations, being flexible can enhance the likelihood of this occurring.The #1 rule of real estate is to not take things personally.
If you plan on submitting an offer that is substantially lower than the listed price, make sure you offer the seller something in return.
3) Your Offer Should Be As Clean As Clean Can Be
If price is your primary concern, then the other subjects in the offer should be valuable to the seller. Is offering a quick possession of value? You never truly know someone's motivation for selling – for all you know this money could be keeping a business afloat or needed to bail a family member out of financial trouble.
There is one thing that is constant throughout the world, money makes it go round. And cash is king! Use any superlative you want, but quick money can offer be a great thing to offer a seller. Excluding the financing clause and offering a large deposit will let the other party know you are serious and able to act quickly.
As a real estate agent in Vancouver, I personally prefer to avoid lowball offers. But a lot of agents, especially those who work with investors, are more comfortable with this strategy. It's not my preferred way of doing business, but at the end of the day it's always ultimately my client’s decision whether or not they want to submit or accept an offer that is substantially lower than the listed price.