How to Make an Offer for a House and WIN

Whether you’re buying commercial properties or looking for your dream house, there will be trade-offs.

Everybody loves great deals. You want to buy it for low. But the seller wants to sell it for as much as you can afford.

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Is it possible to reach a win-win situation?

Not always. Depending on your expectations and who’s selling the house, you may or may not get to an agreement. 

One thing for sure is: your ideal home is already available, probably close to your preferred price. But finding the right seller and property can be time-consuming. 

Sometimes, it’s neither enough to come with a “reasonable” offer. If a property caught your attention, many others might want it as well. You’ll need to give more than everyone else to have a chance.

Do you consider saving thousands of dollars worth the energy and time? Keep reading: getting the house doesn’t need to be complicated.

Why should you make an offer for your house?

It’s market psychology 101: each person wants to make the most of their money. The difference is, everyone has different standards.

Although the general market draws the line, you also find sellers going either below or beyond the average.

Good deals aren’t common, but when they come up, buyers take them quickly. Can you expect to get the property when everyone is looking at the same listings with similar bids?

You’re not giving yourself the best chance, let alone getting the price point you want.

But don’t worry. Even “non-negotiable” listings have room for offers if you know how to ask. You’re reading this guide because you want to make every dollar count on your purchase.

Before getting the best deal, you need to:

  • Prepare your offer so that the seller perceives a serious buyer.
  • Use some negotiation strategies to reach that win-win scenario.

The last one is about communication more than persuasion. One has to be flexible to accept the seller’s point of view while presenting your interests with confidence.

You will get better results when you meet the sellers in person. But if all this negotiation sounds intimidating — or you’re simply too stressed with other matters — you can always consider hiring a realtor.

We’ll get into detail about everything you need to know. Before we dive in, here’s why negotiating should be your must and not an option:

  • The asking price is a reference. Make an offer based on your objective estimation of the property value. Run home inspections and appraisals, even if the seller claims to have done those already.
  • You deserve a fair deal. There’s no need to pay above the market price unless you’re in a hurry to move to a new place. Most sellers respect reasonable, well-studied offers, even if they don’t benefit them.
  • You needn’t cover all mutual costs. Closing costs add up 2-5% of the house value, yet both parties want to close the deal. Why pay for it yourself when you can split in 50%, if not let the seller pay for it? The same applies to escrow protection.

If you don’t make an offer, you have no guarantee of getting a fair deal. The seller will neither know what your conditions are.

Keep that in mind, even if you’re buying your first house, or sellers have more experience than you.

5 Decisions To Make Before Making The Offer

In essence, making an offer is simple. But an offer the seller can’t refuse is a different story. Your preparation tells them the difference between a person merely interested and someone ready to buy.

If I were a property owner, here’s what I’d prefer buyers to have:

  • A pre-approval letter showing they can afford the purchase
  • Reasonable price expectations based on factual research
  • Excellent credit score
  • Some previous home-buying experience

Here’s what you should consider:

#1 Do you need a real estate agent?

You don’t want to waste time with fake properties, outdated listings, or owners who are too attached to sell. A big part before the negotiation is choosing your property, which can consume dozens of hours going back and forth.

If you want to buy well and fast, get an agent. It will save time on market discovery and negotiation.

Of course, every realtor has a different personality and goals. The intermediary should always work in the parties’ best interests — here’s how to pick one:

  • Request some legal proof to verify that they follow the fiduciary standards. That means they always have to work in your best interests.
  • Get some testimonials, and use past success stories to picture what the experience will be like. Finding a realtor through incentive-free referrals is a sign this professional has helped people.
  • Filter to buyer’s agents only. If they don’t work with sellers — they don’t have any listings to promote other than the ones you need — you can assume they want you to get the best deal.
  • They offer you a reversive agreement. You don’t want to be stuck with a stranger who can’t help you. Agents may offer an “initial 30-60 day agreement.” If they don’t get results within that timeframe — or you no longer want to work with them — you can walk away from the contract, no questions asked.

There’s a lot more going into it. Some people even get paid to find the right realtor for buyers. Check this video to expand on how to find the perfect buyer’s agent.

#2 Get your payments ready

Coming up with the money will instantly catch the seller’s attention. Time is money, and they’d rather talk to a decided person than someone just looking around.

If you can pay for the house in cash on the spot, you’ve already won half of the negotiation battle. But you still have choices if that’s not the case:

  • Can you get pre-approved for a mortgage? If you haven’t contacted lenders yet, homeowners may consider you a risky buyer. Approval letters, along with a high credit score, will position you highly for the deal.

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  • Offer more down payment. Like paying in full, sellers prefer you to pay upfront as much as possible (average ranges go from 3 to 20%). When on a tight budget, you either lower the down payment or look for less expensive listings.

There’s no point in paying more upfront if you can’t afford later costs. Assess for unpredictables, closing, and moving expenses.

 #3 Set your price limit

It’s not enough to say you want to buy as low as possible. Sellers have many reasons to demand more. If you don’t have a number in mind, you’ll likely justify whatever price they give you.

Whoever has the most (accurate) information has a negotiation advantage.

  1. Estimate the value based on the housing market and the lender’s appraisal.
  2. Include closing costs and an emergency budget for unexpected expenses (around 2-3% of the total price).
  3. Allow enough flexibility for negotiation, 3-5% above what you’re willing to pay.

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Although the last point depends on your interpretation, it can secure you the house. If you can’t get to win-win, you could afford to lose small if:

  • You believe the home will be worth more in the future
  • The property issues are easy to fix (furniture, paintwork, appliances)
  • A small renovation can boost the value significantly
  • You plan to live there for the rest of your live (unlimited ROI)

You might pay a bit more if that’s the best listing available. But we don’t recommend buying it if you feel like having no choice.

#4 Boost your credit score

High scores make life a lot easier. It gives you financial benefits, thus adding flexibility to negotiation.

You deserve better rates if you’ve proven yourself as a responsible buyer. Your home negotiation doesn’t start with the owner, but your lender. A perfect score works for sellers as a guarantee that they will get paid.

Your score has a lot to do with:

  • The number of credit lines you can manage
  • Paying on time consistently
  • Your overall credit history length
  • The number of hard inquiries you made this year

Some fixes take a few weeks, while others can take years. Although we can’t cover the topic in a single paragraph, the best way to improve your score is not to lose it. It’s too easy to make small mistakes, which make a big difference and stay in your records seven years or more.

Here’s a quick but powerful way to boost your FICO score.

#5 Allow for expenses after the purchase

Do you have at least 5% to cover closing costs, home inspections, and fees? If so, let your seller know.

That doesn’t mean you’ll spend that much (because you can negotiate them). But coming prepared instantly gives the seller more confidence in your offer. It removes pressure from the negotiation and allows you to make a larger down payment.

7 Home Negotiation Techniques To Get The Ideal Price

Now that you did the work, you’re ready to claim what you want. Here are seven simple ideas anybody can use to get better prices AND keep sellers happy:

 #1 Have options

Negotiating is about making decisions. If you only look at a single property, you’re not negotiating but chasing. You don’t even think if:

  • The seller set an unreasonable price.
  • Other listings would do better than the current offer.
  • You have to stick to your conditions or agree with the seller.

If the owner doesn’t want to negotiate, and the price is far from your projection, look somewhere else.

“But I don’t want to lose this property.”

“What if it’s my only chance to buy?”

“I don’t know if I can find any better listings.”

You don’t want to be in that situation. You’re the one who qualifies the seller and property, not the other way around.

If you have multiple candidates, you can be more logical and make your offer more explicit. If a seller doesn’t give you the price you want, you can walk away. Tell him to contact you if he changes his mind, and nobody has bought it yet.

#2 Low-anchoring strategy

When sellers price unreasonably high, you can offer unreasonably low to get to the middle point, which is the most reasonable.

Ask them why they chose that asking price, present your arguments, and offer a bit less than what they are willing to sell. 

Have a strong argument before making a lowball offer, or the seller will see it insulting. When you bid less than your best offer, you’re more likely to get the price you want because your second offer looks more reasonable compared to the lowball. 

The seller will feel like winning the negotiation, even if they don’t get the rate they wanted.

#3 Share the most information

We’re more likely to accept an offer when the other person is the most documented. Someone who knows everything about the deal will likely know the best solution.

Aside from influence, learning more will help you understand the seller and how to sell yourself. Make the offer you want, but focus it on the seller to show how he benefits. 

When sharing your offer, let them know that you considered:

  • The reason they’re selling
  • Fees and taxes
  • Square footage, room count, and comparables
  • Its time in the market and the average time of similar houses
  • Other properties you’ve seen and how they price
  • The home inspection

You’re making it easier for the seller, who will see you as a responsible buyer.

#4 Negotiate after committing

Negotiation doesn’t need to stop after the closing. If the home inspection or appraisal points to a price in your favor, you can renegotiate the deal. 

For example, you can exclude appliances from the house. It may save you around $2,000, and the home inspection will be more likely to turn well.

Most agreements include standard contingencies: preparing the house for inspections and disclosing any hazards and structural issues. These conditions allow you to undo the deal and walk away if the seller doesn’t meet them.

More contingencies add purchase protection, but too many conditions can dissuade sellers from working with you.

#5 Create an escalation clause

You love that home, but many others plan to buy it as well. If you want to secure the deal, you have to bring more money to the table than everyone else.

That doesn’t mean overspending. An escalation clause makes the offer just affordable enough to outbid competitors. It tells the seller you’re willing to bid more than the highest offer (usually $1K-$10K) up to a limit (e.g., $420,000). 

You have to +decide when to disclose that information, though. 

We recommend you offer to pay 1K-10K more than the highest bidder. Only disclose your maximum if they exceed it.   

#6 Ask to waive closing costs

If you’re losing the negotiation by a few thousand dollars, negotiating transaction costs can balance the situation. When there are no more buyers interested, you can ask sellers to cover closing expenses.

There’s nothing wrong with paying more if you have enough money left after the purchase. If you find it was a bad idea, take advantage of contingencies to go back.

When paying 100% in cash, closing costs are minimal. When buying with a mortgage loan, sellers are more likely to cover these expenses for a larger down payment.

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#7 Pay more upfront

Some sellers want to get the most immediate value for their house. $100 today is worth more than $150 tomorrow because you can use that time to invest that money.

You simplify the process if you get the home in a single purchase. Sellers also accept mortgage borrowers but prefer larger upfront payments.

You’d save in closing costs and interest rates. As long as you’re not spending your last dollar, it’s worth paying more today to be debt-free tomorrow. The sooner, the better.

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Should Your Agent Make The Offer Instead?

You may know what you want and what the seller does. Maybe you met them in person and are willing to negotiate. But will you be able to communicate with their interests in mind?

As mentioned, whoever has the most information gets a negotiation advantage. While experienced buyers could do well alone, buyer’s agents make the job a lot easier.

Here’s why you may or may not want to work with one:

  • Insider knowledge. Most agents have spent years studying the market. This information is invaluable for first-time buyers. A professional who knows the exact purchase process can, for example, account for all the paperwork to avoid delays.
  • Commissions. Everything worth having has a price, and agents are no exception. Expect to pay up to 6% more for the house you want. Some realtors offer flat fees over percentages, but they’ll choose whatever is higher.
  • Efficiency. If you hire an agent, you WILL save time and energy. They will research listings better than other buyers do without help. You no longer need to confuse with fake, duplicated, or outdated listings, because they’ve contacted every seller by phone.
  • Availability. Realtors share their time with clients to find the right property. Excellent agents have more clients, which means less time to split among all of them. The best professionals may already be unavailable, and your only way to work with them might be an offer that doesn’t benefit you.
  • Persuasion. Even the most contradictory expectations can get to an agreement with communication. Those who know the market present offers based on objective value. If they need to make trade-offs, they’ll find a way to get around the problem (e.g., if your market knowledge says prices will increase years later, it may be smart to go slightly over the budget).
  • Limitations. It’s not an all-in-one solution. Real estate agencies can’t replace appraisals and home inspection costs.

Now, think of how the perfect realtor could help you, and decide if it’s worth it.

Closing Thoughts

Here’s the one thing you should take: You make the best offer when you don’t have the necessity to win the deal (ironically). Ask yourself where you can find better options because there are.

If you can’t let yourself lose the property, you already lost.
One never knows when the next big deal will come up. Think twice before committing to decades of mortgage payments. Maybe you haven’t met the ideal seller yet.

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