For most Americans, the purchase of a home is the largest single purchase of one’s adult life. For these reasons and many others, the real estate negotiation process can be intimidating, uncertain and even overwhelming.
Most buyers want to get the most house for the least amount of money but are not sure how to go about making the offer that guarantees that. There are many factors to include in an offer and style of approach that are non-monetary, but that can lend themselves smartly to achieving the lowest possible overall price for the home. The following are a few foolproof pieces of negotiating advice that can quickly make the path to home ownership into a stress-free process.
Finding the right real estate broker is as essential as finding the right house. You need to interview brokers with a mindset toward not just how well you can work with them and what your personal chemistry may be, but, most importantly, how finely they have honed their negotiating skills. Ask potential brokers to list their best strategies and common methodologies for you, generate specific questions about how they would approach negotiating the price of the house you want and also find out what their success rate has been in achieving sales significantly beneath the asking price in the past. A good broker will have all of this information readily available for you. Remember that your broker is your market and negotiating advisor during the process of obtaining the home you want. This should be a person who listens to you but feels comfortable challenging you if there are gaps in your knowledge that could cost you money, especially if you are a first-time homebuyer.
Market research is absolutely mandatory in the creation of a proper home-negotiating strategy and a solid, respectable bid. While it is partially the job of your broker to educate you about the market in which you are making an offer, the responsibility for knowing comparable sales in the area, the level of demand for housing in the neighborhood you want and how competitive your offer can appear rests with you as well. You do not need a degree in analytics to find out about and understand the housing market in your area. Study online resources and public records to get a sense of the history of the region in which you are seeking to buy. Be knowledgeable about housing trends in the area, such as whether detached single-family homes or condominiums are on the building upswing or if there are hot new shopping areas and reputable schools nearby. All of these pieces of information help you construct a successful bid for your dream home.
If you are submitting an offer that you know will not be the highest that the seller sees, structure your negotiations beyond price alone. It may be that your seller is looking to move the property as rapidly as possible; in this case, the ability to guarantee a short closing window and/or inspection process might be a large advantage. Perhaps your bid is lower than others on the table are but you can offer a cash payment for the home or a higher deposit of earnest money. Cash in hand is far more appealing to most people than the promise of cash later. Bear in mind that time is often valued as a much more valuable commodity even than money in real estate transactions. If you know that the seller has not yet found a new place to live, you might work in the offer of a leaseback on the property for whatever length of time the seller needs, or offer to buy unwanted furniture or appliances in order to save the seller the time and energy of offloading them. Take in the practical factors affecting your seller’s motivations and turn them into creative negotiating points beyond asking price.
It may seem unlikely at first, but the addition of uniquely personal touches to your official home buying negotiations can make all the difference in the success of your bid. Attach a letter about why this is your dream home or what ties you may have to this community. You might include a picture of your family and tell reasons why you want your children to grow up in this home or neighborhood. If you know that your seller is interested in the historical context of the home, talk about your plans for its preservation. Perhaps your seller is focused on design, in which case you may discuss your plans for future renovations and upgrades. Whatever you choose, this effort is intended to put a very real and human face and story with what is often a far too dehumanized process. Sharing personal plans or ideas about the house with your seller can encourage him or her to want to help you get the house—a win/win for all parties.
Utilize important aspects of the home negotiation process, such as the inspections and appraisal, to your advantage. If the home inspection reveals damages or flaws in the home that may diminish its overall immediate value, offer to handle these issues yourself in exchange for a lower purchase price, or ask the seller to consider them included in the lower offer you initially made, which may now look more attractive. Likewise, if the appraisal comes back low, you can use this to leverage a lower offer. Stress to the seller that your interest in the home supersedes the appraisal valuation, but that this may not hold true of every buyer. Your aim in utilizing inspections and appraisals as leverage is not to demean or belittle the value of the house, but rather to showcase to the seller tangible reasons why it might not fetch the initial asking price and thus why your offer should appeal. Avoid any kind of forceful calls to action, but rather gently suggest via information gathered in the inspection and appraisal process that there may be necessary financial outlay or market loss for any buyer on the home and these are factors that would legitimize a lower asking price.