Negotiating the Sale Price of a Home
One of the most intimidating parts of the home buying process may be negotiating the sale price with the seller or the seller’s agent. If you’re working with a real estate agent, too, they will likely do quite a bit of the “dirty work” of negotiation. Still, it’s wise to understand negotiation tactics to ensure you’re getting the best deal possible on your new home.
The two most important factors to keep in mind when negotiating a sale price are your maximum budget and local market conditions. If you’re been preapproved for a mortgage loan – which is a smart move – you’ll know the maximum amount you can spend. This hard parameter will be your guiding point throughout the negotiation process. Market conditions will also play a significant role. Tactics for negotiating a home sale differ whether you’re buying in a so-called “seller’s market” or a “buyer’s market.”
In a seller’s market, in which conditions are primed for sellers to entertain multiple offers at or near asking price, it’s best to keep things simple. Loan preapproval is an important bargaining chip, as is moving quickly to make an offer. It’s best to make your original offer close to the asking price, to show the seller you understand the true value of their home. Avoid asking for non-standard contingencies in the purchase agreement (financing, appraisal and inspection will protect you as the buyer) and keep in mind that too much back-and-forth may cause the seller to end negotiations and look for a new buyer altogether.
In a buyer’s market, you’ll have much more leverage, especially with sellers who need to sell quickly. In these market conditions, you can feel comfortable making an initial offer about 10 percent lower than what you are actually willing to pay. It’s also prime time for buyers to ask for appliances, furniture, or other personal property. While you’re likely to get some concessions from the seller, avoid becoming a “pit bull.” Some sellers may be turned off by an overly-aggressive negotiation.
Regardless of market conditions, remember that all negotiations begin on the premise that compromise is beneficial – and expected from – both sides of the transaction.
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