Is It Too Low? What Is Reasonable to Offer Below Asking Price?

Determining the right offer for a house can often feel like a delicate dance. While buyers aim to secure their dream home without overstretching their budget, sellers are looking to get the best possible return on their investment.

So, how much below asking price is reasonable to offer? The answer isn’t always straightforward, as it depends on the state of the current real estate market, the condition of the property, and the urgency of the seller.

We’ll discuss what’s reasonable to offer to ensure you strike a balance between securing a great deal and not offending the seller with a lowball offer.

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Should I offer less than asking price?

Making an offer on a house is as much of an art form as it is a strategic move. You want to make an offer that will save you money (of course), but you also want your offer to appeal to the sellers.

So, how do you even come up with an offer that is both reasonable and non-offensive?

First, you need to determine how much house you can afford. HomeLight’s Home Affordability Calculator will give you an idea of what your mortgage payment would look like depending on factors like your income, your credit score, and monthly debt.

Of course, this is just an estimate — you’re still going to want to get preapproved for a mortgage. Prequalification will give you a better estimate of the size of the loan you’ll qualify for, and it can function as documentation to show sellers that you’re likely to be approved for a mortgage.

Let’s look at different circumstances where it would be acceptable to offer lower than the asking price.

When it’s reasonable to offer 20% or more below the asking price

One of the most significant factors that will work to your benefit when offering below asking is if it’s an active buyer’s market. In a buyer’s market, there are fewer qualified buyers than there are houses for sale, which gives buyers some leverage. Not only that, if a house has been on the market for a while, the seller is more likely to accept a lower offer to close the deal.

The condition of the home is also another big negotiating point. “It depends on how bad the repairs or the damage is,” says Mary Riley, a top real estate agent in South Carolina. “When you have a seasoned agent, sometimes you can work it out, but you have to have good negotiating skills to make that happen.”

Some significant repairs that might spur a price reduction include:

• The roof needs replacing.
• There are foundation problems.
• The home’s systems (electrical, plumbing, HVAC) need upgrading or to be brought up to code.
• The house is severely run down and needs extensive work.

It’s also acceptable to offer 20% or more below asking when the house has been priced significantly higher than what other homes in the neighborhood have sold for. If comparable homes have sold for much lower than the list price of the house you’re interested in, that could work in your favor.

When it’s reasonable to offer 11% to 19% below the asking price

Asking for 11% to 19% is acceptable in situations when the house needs updating, but it’s nothing too serious. Maybe the kitchen appliances are outdated or the flooring needs to be replaced. Improvements like these can be excellent for negotiation — especially when comparable homes have been updated — and the money you stand to save on the home can be put toward those costs.

You may also be able to make an offer in this range when you know the homeowner needs to sell fast. Typically, sellers are in a time crunch when they’re facing deployment, divorce, work relocation, or financial hardship.

When it’s reasonable to offer 5% to 10% below the asking price

If the house is in good condition but needs some cosmetic updates, you may want to offer 5% to 10% below the asking price. Maybe the home has undergone some smaller improvements like new flooring, fresh paint, or fresh landscaping, but other homes in the area have new appliances, updated bathrooms, or a finished basement. You could make the argument that comparable houses have additional features but have sold for or are listed for the same price, which may encourage the seller to reconsider their original price.

Or, if the house has been on the market for several weeks, but there hasn’t been much interest, there’s a good chance you’ll get away with offering below asking price.

“Typically, a listing agent will list the house $10,000 over market value because they already think that the buyer will want to negotiate. The buyer’s agent knows this and will make a lower offer,” says Riley. “The most important thing when making an offer is to have your agent do a comparative market analysis to see where the price of the home is compared to the market value and if it’s priced accordingly.”

When it’s reasonable to offer 1% to 4% below the asking price

Offering 1% to 4% below asking may not seem like a lot of savings when you’re spending hundreds of thousands of dollars, but the reduced price will make your mortgage payments less every month.

You may want to offer below 5% when you’re paying with cash or when the market is more balanced.