“I’d like to add that negotiating is not something to be avoided or feared – it’s an everyday part of life.”
~ Leigh Steinberg
Negotiation has always played an important role in any real estate transaction. As such, I wanted to share some of my key tips on how to negotiate a better deal on a home.
How To Negotiate a Better Deal on a Home
In order to understand how much negotiation leverage you have in a deal, the first step is to examine the current market where the real estate is being sold. Is the current market a buyer’s markets, seller’s market or balanced market? A great deal may mean paying list price for a home or it could mean saving on closing costs, housing repairs and the selling price. Your Realtor can help you gauge the current market and adjust your negotiation accordingly.
Before You Make an Offer
After evaluating the market, you need to get your ducks in a row. One of my sales managers from my car selling days used to ask if our customer was ready to “Rock or Walk”. To have the most bargaining power, you must be ready to accept an offer or walk away. If you see a property you like, make sure you’re prepared to act. Here is what you should do so you can make that decision.
Have your home buying cash and/or financing all ready to go. Be pre-approved before you make the offer. Also, make sure you know the value of the home in question based upon the market, not the asking price. It is important to realize that the actual market value can be higher or lower than the asking price. Always compare your offer to the value of the property, not the offer.
In addition, do the math on your mortgage. Often the difference between 190k and 195k or 200k is very little in terms of your actual mortgage payment. Having this information prepared will help you be able to evaluate if accepting a higher counteroffer well still work for your budget.
General Home Negotiating Tips
- Your first offer gives you information about the seller, such as if the seller needs to sell quickly or if they are in for the long sale. Either way, your first offer will give you information on the seller’s intentions.
- Expect to compromise, unless you’re in a strong seller’s market. In that case, you may find yourself paying sticker price. In all other markets, just remember it is a negotiation.
- If a seller is stuck on the price, ask for other concessions. Do you want money toward closing costs? Or maybe you could have the seller throw in a new washer, dryer and refrigerator. Heck you could even ask for the living room furniture.
- If you want it ask for it. If you ask for 50 things and get 25%, that is a lot more than if you ask for 10 and get 25%.
- Don’t low-ball a seller. This can lead to the seller refusing to even entertain a counteroffer. Remember, base your offer on the value of the property not the price.
- Prepare to negotiate contingencies. Contingencies can be a better bargaining chip than money to some sellers. A quick closing or better terms can persuade sellers to lower their price.
- Don’t assume an inspection will reopen negotiations. Yes, an inspection may reveal issues that need handled. But if you have negotiated well from the start, you may find the seller opposed to giving up anything else.
- Respond to every offer or counteroffer quickly. This shows you are ready to ROCK. Even if you are miles away, always respond to a counteroffer with your counter. On a side note, make sure to always let your agent handle contact with the seller or seller’s agent. Contacting a seller directly can open up a can of worms.
Hopefully these tips on how to negotiate a better deal on a home will have you in your new home faster and with fewer headaches.
Do you have any more tips on how to negotiate a better deal on a home? Share them in the comments.