What To Do Before Negotiating a Home Price
Negotiating the list price is a normal part of the real estate experience. Your real estate agent will often play a role in guiding your transaction, but it’s wise to familiarize yourself with the negotiation process.
You’ll need a lot of patience and organization when it comes to negotiations. Here are a few things you can do before you start:
Understand the Market
The housing market will determine the amount of wiggle room you’ll have in terms of house prices, especially if it’s a buyer’s market or seller’s market. Essentially, a seller’s market means that those selling their homes have more negotiating power than the buyer. When a seller’s market occurs, there are likely more home buyers than existing homes for sale.
In a buyer’s market, people looking to purchase a home hold negotiating power over the individuals selling their property. This usually happens when there are more homes for sale than potential buyers.
However, if many people are interested in a single home, you’ll have less room to negotiate the purchase price. By contrast, if the local market is dry and the seller isn’t receiving much traction, you’ll have a better opportunity to ask for a lower price.
Get Your Finances Together
Before you get into a possible bidding war with other buyers or take a seat at the negotiation table with the sellers, you’ll need to guarantee that you can get a mortgage.
A pre-approval letter will indicate the mortgage amount you’re qualified for and you’ll know what price you can safely negotiate too.
Why Is the Seller Moving?
The more you learn about why the seller is relocating, the better it’ll be for your negotiating tactics. Perhaps the seller is going through a divorce and is looking to move closer to their children. They might want to sell their property as fast as possible. The seller may have bought a new home and might not be able to do the repairs or renovations you were hoping for because they’re more concerned about their new purchase.
Your real estate agent can do some research about the seller and determine whether they’re looking to keep their listing up for a short or long while. This information may seem unnecessary but it can be a huge help in knowing whether or not you can negotiate the seller’s price.
Get a Home Inspection
Purchasing a home after only viewing it can be a big gamble. Asking for a home inspection can ensure that the house is in working order. It can also play a key role in negotiating the final selling price. In a slower market like today – where properties are not selling instantly, adding a home inspection in your offer will have less drawbacks from the seller.
During a home inspection, an inspector will walk through the property and determine if there are any issues with the foundation, ventilation, HVAC system, and more. Once evaluated, the inspector will provide a detailed report of their findings.
You have a few options if the home inspection uncovers any potential problems that pose as a deal breaker. You may ask the seller to fix the problems found, ask for a credit for closing costs, or a lower price for the home.
An important distinction is that both an appraisal and inspection are different. Appraisals only offer rough estimates of what the home is worth, whereas an inspection is a more thorough look at the integrity of the real estate property.
Negotiate Reasonably
As we mentioned, negotiating is an expected aspect of the real estate process. However, it’s integral to avoid lowballing your offer or going higher than you’re able to afford. Consider going in 10%-20% lower than the asking price. Take a look at the market. Is it a seller’s or buyer’s market? These factors will play heavily into the negotiation process.
During negotiations, the seller may make a counteroffer (also known as a ‘sign back’) if your initial offer isn’t accepted. There are various ways you can receive a counteroffer which is often influenced by the following:
- Higher sale price
- Changing the closing date
- Reject conditions
You can discuss this counteroffer with your real estate agent. They’ll know the best course of action to take moving forward!
Contact our team today to find out how we are able to negotiate the asking price and help many of our clients receive positive results.