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The Basics

How to lowball a home seller

Do your homework and you might be able to make an aggressively low offer that a seller will accept -- or at least counter.

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By MarketWatch

Home sellers are not automatically turning up their noses at offers that come in far below their asking prices these days as prices plunge and the inventory of homes for sale grows in most markets.

But buyers who ask for deep discounts still risk offending sellers to the point where they quash any deal. So before making an aggressive offer, some homework is in order, real-estate professionals say. Further, buyers need to effectively explain why the price of a home should be lower.

That's what Pat O'Heron did when buying a home in Ann Arbor, Mich. He was able to negotiate a steep discount with a seller who relocated for a job, in a neighborhood that had two years' worth of inventory on the market.

Before he even made an offer, the asking price had dropped by about $80,000, he said. After O'Heron made his case for an even lower price, he bought the home for $270,400, with about $11,000 in other credits. The net price ended up being $115,000 below the initial asking price.

O'Heron was able to take advantage of a market in which buyers decidedly hold the upper hand, with its excessive for-sale inventory.

But when an aggressive offer is attempted, there is always an inherent danger in going too low. There's a real risk the offer will insult the sellers to the point that they'll refuse to even counter, real-estate agents say, and the sellers could easily make the assumption that the buyer isn't committed to making a deal.

"There's a danger of them taking it too personally," said Jon Boyd, O'Heron's agent and the president of the National Association of Exclusive Buyer Agents. "When you're making the offer, if you justify that offer with outside data, then it's much less likely to be perceived as being an insult or (the buyer) not as serious."

Heed these three guidelines on how -- and when -- to make an aggressive bid for a home:

Find out how motivated the sellers are

Certain sellers are going to be more willing than others to negotiate a low offer, and there are several giveaways that might indicate more leeway on price.

For instance, if the sellers have already purchased another home and that sale has closed, they're likely to be more willing to make a deal, said Dick Gaylord, the president-elect of the National Association of Realtors and a broker with Re/Max Real Estate Specialists in Long Beach, Calif.

And certainly if the property has been on the market for a long time, sellers will be interested in entertaining any offers, he added.

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To get at as many details as possible, Gaylord contacts the seller's listing agent. The nuggets of information he gets can be clues as to what kind of offers the seller will consider.

Overall local market conditions also play a role. The housing market in which O'Heron bought, for example, was sluggish, and the home he bought had been on the market for about a year. Because of the job relocation, the seller needed to move and wasn't in the position to take the home off the market until conditions were more favorable, O'Heron said.

Do your research. Things seem to be tough all over these days, but real estate is intensely local. Make sure you know what's happening in the market where you want to buy.

Continued: How to make your case

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