How to negotiate the best price when buying a house?
1. Hire a professional real estate agent: This can help you crack the toughest of deals with confidence as an experienced agent has the right skill set and expertise to help you stay on top of the buying and negotiating process. They know the pulse of the market, have access to the latest listing prices and will help you negotiate difficult transactions with their knowledge and a repository of experience. While your decisions may get clouded with emotions, agents will steer you to look at the entire process objectively – preventing you to make a rash decision.
2. Do your research and get information: Enter the battle with right ammunition. Do your homework and gather as much information about the seller’s motivation to sell the house, market value of the house and how long it’s been on the market. By the time you are done with your homework, you will have some really useful information at your disposal to negotiate with confidence. A professional real estate agent can prove to be a great partner in doing your research.
• Determine the fair value for the home: Ask your agent for a Comparable Market Analyses (CMAs). It will show you what properties, similar to the one you are planning to buy, have actually fetched in the same neigborhood. This will give you an idea if the home is priced above or below the market value and how much can you negotiate.
• Find out why the seller is moving: Knowing whether the seller ‘wants to sell’ or’ must sell” will give you an extra edge. Does the seller need to move quickly due to a sudden job change? Is there any personal situation that require the seller to sell the house quickly? Or perhaps the seller is not in a hurry at all? Though a lot of information will depend on what the seller and the seller’s agent want to disclose but sometimes seller’s willingness to negotiate will be a good indicator. You can also engage the locals or the neighbors in a friendly conversation to learn about the seller or the house. Often, if the seller responds quickly with a counter offer, it is a sign they are interested in the game.
• Find out how long the property has been on the market: If the property has been out there for too long, you may find yourself in a better negotiating position.
• Examine the house for any faults: Sellers may be more willing to negotiate if the home inspection reveal any minor or major issues.
3. Be realistic with your offer: Well, if you won’t ask it, you won’t get it. This much is true. And you can really get lucky with lowball offers but more often than not asking too low may annoy and even insult the seller. If you genuinely believe that the house is not priced realistically, do not be afraid to make a low offer. Support your offer with facts and explain why the property may not be worth the current asking price. But if your research shows that the home is priced fairly, you will only end up turning off the seller with lowball bids. Ask for too low a price and don’t be surprised if negotiations stop abruptly. It shows you are not serious, you don’t know about the market and you may not be capable of completing the transaction. Especially if you are in the competitive market where there are many buyers, this strategy is not going to win you any points. However, if the seller is not willing to lower the price, you can ask for some concessions, for example assistance with repairs or home improvement or paying for the closing costs.
4. Be prepared: Do you want to appear as a serious buyer? Do you want your offer to carry more weight? Before you start looking at potential homes with the intention to buy, get your finances in order. Make sure there are no pending financial issue and you have been pre-approved for a mortgage. If the seller is serious and is looking to close the deal quickly, coming across a ready, willing and capable buyer will tilt the balance in your favor.
3. Don’t show your enthusiasm: It can be a little difficult to hide the twinkle in your eyes when you have finally found the house of your dreams. But open display of your enthusiasm will only give sellers and their agents a cutting edge in the negotiating game. Sensing your desperation, they will only try to commit you to the highest possible price. Try to appear dispassionate and use the information you have gathered that can negatively but realistically affect the value of the house. Are there any major repair issue? Is the property up on the market for too long? Bringing up issues like this at the right time will give you a lead.
4. Let the little things go: Don’t get hung up on things that can be easily changed later. While it is important to look at the condition of the house such as foundation and structural issues, there are lots of things such as carpeting, countertops, appliances etc. that can be ignored if you really like the house.
There are no hard and fast rules to how to negotiate but these basic tips will be useful to get you started. But if things don’t seem to move in the direction you would have hoped, don’t be afraid to let it go. If you have already set a realistic limit for your budget, and the seller’s final offer seems to surpass that, be prepared to walk away. It is extremely important that you stick to your budget and don’t let your emotions cloud your judgement.
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