Tips for Negotiating the Price of a House

Buying and selling homes requires massive groundwork and a good amount of homework. When buying a home, you’d have to prepare yourself for walking away from every home you zero in on, simply because the deal may fall apart at the final stages of negotiation even as everything else falls into place. You may end up giving multiple offers but chances are, no seller would take you up on your offer since your instinct as a buyer would be to offer the lowest possible price. However, you can find success by using shrewd negotiation skills.

01Understand the dynamics of the dance

Know that the seller wants to sell their home at the ceiling price, which means the following:

• You’d make an offer.
• It may get accepted or rejected.
• You’d have to make a counter-offer or move on to another home.

Acceptance of an offer at first instance is rare but not entirely impossible. Savvy sellers will reject your offer without naming their counter offer price, but expect you to resubmit your offer with a higher offer amount which comes closer to their listed price.

It’s also important to understand why the seller is selling the house and ask yourself questions like, ‘is it because they want to upgrade or facing some problems in their living conditions and want to move elsewhere?’ or ‘are there hidden repairs in the home that they’re trying to cover?’, ‘has the home been listed in the market for a long time?’, ‘what is the selling history as per the public records?’. These factors will help you determine how much you should actually offer on the home as opposed to the listing price. However, the fact that home inspection is needed cannot be the reason that you should decrease your offer. It’s actually a safety measure to protect the buyer and relieve the seller from any legal responsibilities after paying the compensation on defects. But it’s not considered as a discount while negotiating.

02Offer a realistic price

If you do your research of comparable listings on the market and consider other factors like market conditions, amenities, location, etc., you’d have a fair idea of whether the house is priced reasonably. In such cases, you can make an offer that is more or less close to the listing price; it’s a bad idea to offer a meager price as it will immediately disappoint the seller and reduce the chances of a successful negotiation.

03Know the terms of a conditional offer

A conditional offer is an agreement between two parties that an offer will be made if a specific condition/s is met. Some examples are home inspections and time frame for the inspections, closing costs/additional costs, the closing dates, and repairs. If these are met satisfactorily by the seller, then the offer stands valid.

04Present the offer correctly

Never make a verbal offer. Put it in writing. Also, it makes perfect sense to make an offer within 24-72 hours after visiting the house. This shows you’re serious about the transaction. The seller may not always be willing to wait and may already have bids pouring in.

The seller will take into account the following points:

• Is the offer close to their listed price?
• Is your credit history sound or are you pre-approved?
• How many other acceptable offers are on the table?
• Are the closing dates in alignment from both the parties?
• Is the buyer willing to compromise on the price or on other conditions?

Imagine yourself as the seller and put together a list of questions or concerns that you might have, had you been in the seller’s shoes.

05Hire an experienced or an exceptional realtor

It’s important that you build a trust factor with your Realtor and he/she should be able to navigate through the negotiation process with ease and expertise. Choosing the right realtor can help you save thousands in the home buying process. Not only will they take care of the paperwork, but they will also help you both parties on closing and settlement terms. The right realtor will help you with other components of the process such as the appropriate time frame for home inspections, sign backs, closing time frames (30,45, and 60 days commonly).

Eventually, you may or may not be able to get the deal closed on your favorite home. Be hopeful for success but also stay prepared for rejection. It’s always good to walk away from a deal if you’re getting the short end of the stick.