Having an idea of how to negotiate home prices is the first step in establishing the groundwork for a win-win situation. Whether you’re a first-time homebuyer or not, these home price negotiation methods could help you get the best deal possible, helping your finances in the long term.
Here are some tips you can use to seal the deal on a home at the best possible price.
7 Things to Help You Negotiate Home Prices
1. Do your homework.
Researching the prices of comparables (comps for short) or recently sold homes in preferred areas of choice that are similar to the property you’re trying to acquire, is one of the best ways to get an idea of how much to offer.
A real estate agent will be familiar with local market conditions. However, thanks to websites like Zillow, Realtor.com, Redfin, and Trulia, this information is easily accessible to prospective buyers.
For example, Zillow also shows how long for-sale homes have been on the market, which can help you figure out how negotiable a list price is. These sites enable you to carry out a comparative analysis of the going rates which would make you get the best available deals.
2. Get an inspection.
While your mortgage lender may not need a home inspection — and while skipping one may make your offer more enticing to the seller — it’s almost certainly in your best interests to get one.
The only information you have regarding the house without a home inspection comes from what the seller is willing (or able) to divulge and what your senses tell you.
Home inspections might discover issues such as foundation fractures or plumbing issues that would otherwise go undetected and could incur maintenance costs for you in the long run.
Inspecting the home can provide you leverage to urge the sellers to lower their price, offer you a credit for closing costs, or address the problem themselves, in addition to assisting you in planning for unforeseen repair expenditures ahead of time.
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3. Put your finances in order.
Pre-approved buyers, as opposed to prequalified, are likely to excite sellers the most.
While both entail a lender looking through your financial details, such as income, credit history, obligations, and assets, pre-approval entails a more thorough application and verification process and hence has more weight than prequalification.
Also, if you’re a homeowner looking for an upgrade (or lateral move), selling your old home ahead of time could be a point in your favor with the seller: it means you won’t have to wait until your property is sold to begin the buying process.
This “chain-free” approach necessitates careful planning and, in some cases, the establishment of a temporary dwelling area. While it may not be possible for everyone, it is something to consider if you want to improve your chances of success in a competitive industry.
4. Don’t negotiate too hard.
It may seem disrespectful to sellers if you offer an absurdly low price, especially if you negotiate house prices in a seller’s market or are buying a family heirloom.
While you may be able to save up to 10% off the list price depending on the local housing market, if you go too low on the price, you may end up running out of options. In a hot housing market, you may end up bidding more than the list price.
Albeit, do not negotiate too hard as this may make you look too desperate, which the seller may capitalize upon. Always keep things in perspective when negotiating. Understand the fact that expenses do not end with home prices.
You may have to carry out renovation and repairs. As such, you have to maintain a balance between what you can forgo as down-payment in view of future expenses on renovation and repairs.
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5. Keep a balanced mindset.
On the other hand, you don’t want to let yourself down by refusing to bargain at all. So, even if you’re madly in love with the area, it’s a good idea not to flash all your cards by being overeager from the first time you walk through the house.
Don’t be embarrassed to point out the flaws that make you hesitate, and make sure you give yourself enough time to shop around before you commit to putting money down. Consider not only the list price, but also closing costs and any repair or renovation expenditures before making an offer.
6. Put your offer in writing.
Many experts recommend submitting your offer in writing and including as much detail as possible rather than making a verbal offer on a home. That way, there will be no confusion over what was said, and you will be able to negotiate on aspects other than price.
Buyers may waive one or all contingencies to sweeten their offer when competing against many bids on a home. Contingencies are merely requirements that must be met for the transaction to be completed.
If the property does not appraise at the price in the purchase contract, an appraisal contingency can be used to reduce the home price or to walk out. A clear title contingency also allows the buyer a way out if the property has any liens or problems. It also doesn’t hurt to seek assistance with closing fees.
You might also include a customized note with your offer, which may seem silly, but selling a home can be just as emotional as buying one. Even if you aren’t the highest bidder, describing why you love the house or how you envision your family growing with it might help your offer stand out.
7. Include an expiration date.
Although sellers are normally required to respond to (realistic) bids within a few business days, they are not legally bound to do so.
It’s best to have a firm calendar date on which you’ll know for sure you didn’t obtain the house if you include the expiration date, allowing you to redirect your efforts. Buying a house can be a lengthy, stressful process. When it’s a moot matter, it makes no sense to waste your efforts.
Key Takeaway to Negotiate Home Prices
Negotiating is part of human life as it enables us to evaluate our choices and get better options. It is a skill that is necessary for all aspects of life.
When it comes to buying a home, negotiation can have cost implications because it ultimately determines how much you would pay for the home. However, the strength of your negotiation depends on how well you know the market.
As such, it is advisable to do your ground work very well. This entails knowing the going rates in the area of your choice. The more you know about negotiating property pricing as a buyer, the better.
