In other words: Don’t lowball, but do make an offer that makes sense given the market. (A “lowball” offer in real estate is generally one that comes in at 15% or more below market value.) Not only will a seller likely consider a lowball offer a waste of their time, but you also take the risk of insulting them. And the last thing you want to do is offend the seller.
So, do some research! Learn the fair market value of the home you’re looking to purchase, and find out what other homes in the area are currently selling for (one way to do this is to pay for a professional home inspection). This will help you determine how high or low to go with your initial offer to purchase. Remember, if you start at the very top of the home’s market value (or the top of your budget, for that matter), you won’t have much room to negotiate later.
If it’s a buyer’s market, there are a lot of homes for sale – a glut of inventory – and that means the buyer has the upper hand when it comes to counteroffer negotiations. But if it’s a seller’s market, there’s more demand than supply, so the seller will typically receive multiple attractive offers on their property and thus has less incentive to meet a buyer’s demands or give in to any counteroffer negotiations they find unfavorable.