I am amused by the ways buyers and their agent look for clever ways to justify their offers. One tactic I often see is saying this is the most they are approved for and they back it up with an approval letter which matches the offer price. When I teach negotiation classes the majority of the agents tell me they specifically ask the lender to have the offering price as the amount the buyer is approved for.
This is a stupid approach for several reasons:
- It makes you look like a weak buyer. What seller wants to work with a buyer who can just barely afford the home. And if there are multiple offers it will really make you weak and hurt your chances.
- It’s not believable. Why would I even believe this is what you can afford just because you say so. Again, making you weaker.
- If you were approved for more would you pay more? Of course not. You can’t use an argument that only works the way you want.
- The value isn’t determined by what the buyer can afford. If that was true then it could also be determine by what the seller wants or needs to pay off the loan. The value is determined by market conditions, not personal issues.
Be a strong buyer not a weak buyer. Those who have the most typically pay the least. Weak buyers are like cashing a check at a payday advance. When you can barely afford something you will pay more. It’s much better to just be pragmatic and base your negotiation of the relative strengths of the seller, buyer and the demand for the home. Don’t weaken your position by making up items and not focusing on what truly matters.