Minneapolis, MN: The spring real estate market is is upon us. The past few years have been tough in the real estate market, but like a roller-coaster, the market has plenty of ups and downs. So where is the market today? Can you make a lowball offer anymore?
As a general rule of thumb, it’s a bad idea for potential home buyers to make a low offer in the spring market, as multiple offers and increased sales activity mean sellers are more confident in rejecting your offer. In some cases, though, you might still be able to get away with making a low offer, depending on the specifics in your area and the home you’re considering.
Remember – all real estate is local. In the Minneapolis / St Paul area, good inventory is low. Any home priced under $200,000 in good condition is going fast with multiple offers.
Inventory: Inventory is a huge factor in whether you can get away with making a low offer. If there’s a surplus of inventory in your region, homes will sit on the market significantly longer, and sellers may be willing to entertain lower offers. If inventory is scarce or in high demand, though, sellers are probably getting multiple offers, so your low offer is likely to quickly be rejected.
Prices: If homes are selling in your region, at what price point are they selling? It’s possible for a real estate market to be brisk, but a home that’s priced higher may sit on the market for months while the homes around it sell quickly. Evaluate the prices at which homes are selling, and if you’re willing to take a risk, make an offer on the home that is comparable to other sales. This is more likely to be successful if a seller had originally priced a home high to begin with.
Mortgage rates: With current mortgage rates hovering at history lows, more people are able to afford homes, hence more people are in the market. More people, more competition.
Phychological Warfare: We all feel the need to “win”. You want to win with your lower price, and the seller wants to win with their higher price. Don’t let emotions and personality interfere.
Also consider overall payment before being stubborn causes you to lose your dream house. At a 3.50% interest rate, $5000 more in purchase price is just $22.50 more a month. Talked to your Loan Officer, or review the overall mortgage payment with a mortgage payment calculator.