The best way of making an offer that is below the asking price is to know the reason why the house is for sale. If you want to make a lower offer than the asking price, it’s a good idea to research and find out why the seller is putting their home on the market.

We believe this is the best way of having an offer accepted.

Before talking about the details of this strategy, you need to know that a house purchase offer has two key elements:

1 – how much you can afford to pay

2 – the T&Cs that go with the offer you make

Firstly, ask the real estate agent why the house sale is happening. This isn’t necessarily as easy as asking and it can be hard to find the details if the agent doesn’t know or doesn’t want to tell you. However, rarely are sales just about the money.

The idea is to sort out a purchase offer that could help the vendor with the challenge that he or she is facing (price aside) that might be linked to the reason for their sale.

With these terms and conditions in hand, you can then optimise the offer in order to make it helpful for the vendor. This will give you a better chance of your low offer being accepted.

Below, you will see five possible reasons for a vendor selling their property together with a possible T&Cs strategy. Don’t forget, there are other tools besides Google. You can get free advice over the phone with us!

Reason 1: downsizing or upsizing

If the property is being sold because the family is downsizing or upsizing, it is quite likely that the vendors already have another purchase property in mind. With this, they are likely to feel pressure to get a quick sale so that their dream house isn’t bought by someone else. This is because they are probably using the equity in their current home to buy the new home – a process called bridging finance.

Here are some ways in which you can take advantage of this:

- Finance date – offer a quick finance term. 21 days is considered standard so you could offer something like 7 or 10 days.

- Settlement date – choose a possible settlement date that will allow the current owners sufficient time to move their things. This is usually a period of at least two weeks after the finance date.

With this situation, offering a quick purchase with a decent settlement date might be more attractive for the vendor than a higher offer with conditions that aren’t as appealing.

Of course, you need to check first that it is possible to arrange such settlement and finance dates. You need to make sure your home loan can be approved in time.

Reason 2: Breakdown of a relationship

Unfortunately, it’s quite common for a house to be for sale because of a relationship breakdown. In this situation, it is also likely that one of the couple has already moved out. This means that both parties could have substantial financial pressure as they may be paying out for the whole mortgage or maybe paying additional rent in a new place.

With both vendors likely to be feeling negative due to their relationship breakdown, they will want to resolve their property sale fast, in order for them to get closure both financially and emotionally.

Here is a strategy for making an offer that is below the asking price for a sale due to the breakdown of a relationship.

- Finance date – a short period is appealing to both parties in these circumstances since it will allow them to get closure and move on. Seven to ten days is ideal.

- Settlement date – There are two options here:

o If your moving in date is flexible, you could suggest a settlement period that is more than the two-week standard period. This could be appealing to the sellers as they have to find somewhere new to live.

o Secondly, you could have a normal settlement period of two weeks but allow the vendor to rent your newly acquired property for a short period. Oftentimes it is the mother who is still in the home with the couple’s children and so this might be useful for her in that it would allow her to use the settlement money to buy a new property on a more suitable time scale.

There is a video here which talks about how it is possible to adjust the offer terms and conditions if you a buying a house when the sale is due to the breakdown of a relationship.

Reason 3: Financial Difficulty or Stress

If a house is up for sale because the vendor is facing financial hardship, this could mean that they have fallen behind on repayments. If this is the case, they will be under intense pressure from their bank and will be receiving lots of demands for payments, phone calls, home visits and bank charges or penalties. The vendor will, therefore, be under enormous strain.

If things have gone even further, the home might be in what is called ‘mortgagee in possession’. This means that the bank is in control and will appoint someone to sell the property on the vendor’s behalf. The bank will be well informed of the property’s value and it could be difficult to have a price negotiation unless the property has been on the market for a long time and hasn’t had much interest.

Here is a strategy for making a lower offer on a house where the property is up for sale due to financial problems.

- Finance date – in the situation where the vendor is selling, they will want to sell quickly in order to resolve their financial hardship. In this case, offer a quick period of between 7 and 10 days (be sure to check that you are able to get an unconditional loan approved in this short time). If the bank is selling, they will also want to sell quickly to recoup their costs.

- Settlement date – both scenarios might call for a shorter settlement period.

Here is a video that can help you to learn more about offering on a home where there are financial difficulties.

Reason 4: Job relocation

There are so many different jobs that might require someone to move house. It might be someone in the police, a doctor, a nurse or a teacher. This often takes place at the beginning of the year.

Obviously, vendors in this situation can be under a lot of pressure to sell their property. Lots of people could have already bought a new place in their new town or they might be wanting to buy really quickly so that they can avoid using rental properties.

Often employers (particularly the state government) give incentives to investors such as paying for buying costs, moving costs, solicitor fees and stamp duty. Here is a strategy for making a below-asking-price off on a house in this situation.

- Finance date – offering a quick turnaround of 7-10 days after the contract is signed

- Settlement date – making this take place as soon as possible once the finance has completed.

Reason 5: Property owner is deceased

A home for sale when the owner is deceased can offer you a lot of opportunities. Usually, there has been someone older living in the house so you can expect it to be run down or dated.

Frequently there will be 2 or more beneficiaries (the descendants) whose inheritance is being decided. It is common for people in this situation to have ‘spent’ (mentally) the money before they recoup the actual amount. Sometimes people actually spend a lot of money with the expectation that they will be recouping it through the house sale.

Here is a strategy for offering below the asking price for a deceased estate:

- Buildings and pests – the first challenge for the relatives of the deceased will be the state the property is left in. With this in mind, a short period for the building and pest report of a week will help both you and the vendor alleviate concerns.

- Finance date – offering a quick 7 to 10-day finance date will appeal as the beneficiaries will be waiting for their inheritance.

- Settlement date – make this to be as soon after the finance date as possible.

It's also vital to be aware that you will need patience when it comes to your offer being accepted. It will need to be agreed on by many parties in the case of multiple beneficiaries.