9 Savvy Ways to Negotiate on a Home Purchase
Finding the right home for you and your family is one thing; buying it at the price you want and can afford is quite another. That’s where savvy negotiating comes into the picture. If you want to land the home of your dreams at a price and terms that you’re comfortable with, be sure to employ the following negotiating tactics.
1. Find Out How Motivated the Seller is
Find out as much as possible about how motivated the seller is to let go of the property. It could be that they’ve already bought another home and the closing date is coming up shortly. Or perhaps they’ve taken a new job in another city and are starting shortly.
In cases like these, they may be highly motivated to sell and therefore may be more flexible with the purchase price. Your agent may be able to speak with the seller’s agent to get this type of information. Of course, the seller might not be so open about handing out this information, but it doesn’t hurt to try.
2. Find Out What the Home is Worth
Never put in an offer on a home without first finding out exactly what it’s worth based on the current market. Your real estate agent will be able to prepare a list of “comparables,” which are similar properties in the neighborhood that have sold recently. The sales prices of these properties will give you a much clearer idea of what the home you have your eyes on should sell for – then you can base your offer on that. Use this data to support your offer price if they’re not willing to budge.
3. Offer Flexible Closing
Sellers usually don’t want a long closing – the faster they can get the home off the market, the less they’ll have to spend on carrying costs. A shorter closing will also eliminate the burden of showing the home and keeping it in pristine condition as the seller continues to search for a buyer.
Offering a quicker closing can also help make the seller more confident that the deal will close, as it means less time for something to go wrong with the deal. If you’re flexible on closing and can give the seller the date they want, you might be able to get away with a lower price or other perks.
4. Ask the Seller to Cover Your Closing Costs
If the seller is not willing to budge on the price, you might be able to still save some money by asking the seller to cover your closing costs, or at least part of them. Many sellers might not be too receptive about this, but others might be open to getting the deal done at the price they want if it means contributing to some of the costs associated with closing.
5. Go Into the Offer With an Earnest Deposit in the Form of a Certified Check
One of the many things that can be negotiated in an offer is the earnest deposit amount, which is applied towards the final purchase price if the deal is sealed. Generally speaking, the higher the number, the better. This shows the seller how serious and dedicated you about buying the house. To ensure you really get the seller’s attention, go into the offer with a certified check in hand.
Doing so will eliminate the extra step of the seller having to wait for you to obtain this check from your bank and have it delivered to the listing agent’s office. It’s something you’ll have to do anyway, so you might as well get it over with beforehand.
6. Get Ready to Move Fast
If you’re buying in the middle of a hot market – which is the case in just about every part of California – then you really don’t have the luxury of being able to sit on a listing before finally deciding to put in an offer. Homes are being snatched up as quickly as they’re listed. If you’re in a competitive market, go in with your best offer right off the bat. If you wait too long or take too many chances in the form of lowball offers, you’re bound to lose out.
7. Go in Pre-Approved For a Mortgage
This step should ideally be done before you even start searching for a home. It will tell you what you can comfortably afford and what loan amount you have a good chance of being approved for. Having a pre-approval letter in hand will help you get a leg up in the negotiation process as it will show the seller that you’re qualified and aren’t just a tire kicker who’s just wasting their time. Being pre-approved for a mortgage will make the seller feel more confident that financing won’t be an issue after the contract is signed by both parties.
8. Don’t Hesitate to Ask
You won’t receive anything if you don’t ask. Don’t be afraid to ask for certain things, such as certain repairs. The worst the seller can say is “no.” Once you enter the escrow period, you have more power. As such, you might want to wait until the inspection has been completed before you make any requests. Even if the seller only gives you a fraction of what you’ve asked for, something is better than nothing.
9. Include a Personal Letter With Your Offer
Consider including a personal letter with your offer detailing why you love the house and why it would make a perfect fit for your family. You may even want to include a photo of you and your family to put a “face” to the offer. A tactic like this may work, as it will make the seller feel better that the home that they’ve loved will be just as cared for by your family.
The Bottom Line
Don’t forget that there’s a lot more in a real estate contract that can be negotiated besides the price. Luckily, having a seasoned real estate professional in your corner negotiating on your behalf can ensure that every part of the deal will be negotiated with your best interests in mind so you can increase the odds of coming out of the transaction a winner.
