Negotiating the price of a home can be an emotional experience, but it’s also important to stick to a plan during the process. Having a real estate agent help you navigate the negotiation can be helpful, but you are ultimately responsible for making the final decision. If you are getting ready to purchase a home, use the following tips when negotiating the price.
Look At The Current Market Conditions
You should do your homework to determine if the local market is strong or weak. In the latter, you have a better chance of negotiating aggressively and making a lower offer. Since there are more houses for sale than there are buyers, sellers are more likely to make concessions to get their properties off the market.
If the market is strong and number of potential buyers exceeds the number of houses for sale, the seller has more bargaining power. You should plan on putting more diligence money up, and/or start with a higher earnest money deposit.
Don’t Be Afraid To Haggle
If you’re in the buyer’s (weak) market, start with a lower offer than the seller’s listing price. However, even if you’re in a seller’s market, you should still try to negotiate the best possible price. You should always be ready to counteroffer if the seller refuses to budge.
Prepare Your Mortgage Loan
Before you make an offer on a property, work with your lender or bank to get a pre approval letter that shows that you have the necessary financial strength to close. This will allow you to exert more pressure on the seller and show that you can afford the house.
Complete A House Inspection
Before closing, work with the seller to perform a home inspection. This will allow you to identify any issues that need to be fixed or renovations that need to be made. Sometimes, the seller will allow you to ask them to pay for these repairs before they sell the house.
Negotiate When It Makes Sense
Don’t make lowball offers, as the seller might think you’re wasting their time by making them. Also, don’t go for a higher offer than you can afford. Usually, a lower offer should be around ten to fifteen percent below the asking price. In certain markets, you can go as low as five percent. On the other hand, you may need to start at a higher price in order to get the deal done.
Work With Your Real Estate Agent
Working with a real estate agent can be advantageous if you’re a first-time home buyer as they can help you get a lower price. Their knowledge of the market will allow them to negotiate the details of your purchase contract in the best possible terms.