How to Prepare Yourself for Negotiating a Home Purchase
House hunters are finally enjoying a buyers’ market. So that means learning about negotiating a home purchase is a very important step in your home buying journey.
While there is still a lot of real estate available and few desperate sellers, you’ll still need to do a fair amount of homework before you make an offer. When you are negotiating buying a home it comes down to knowing how much you can afford, when to walk away and maintaining your composure at all times are some of the most effective negotiating tactics you can employ when buying a home.
“It’s still a great time to buy in most areas around the country, especially in the Southern U.S,” says Alvaro Moreira, Mortgage Advisor with Moreira Team, Atlanta. “There’s more supply than demand, which puts buyers in the driver’s seat.” A few years ago, buyers had to make a decision on the spot and in most cases pay more than they expected for the home. That’s no longer the case. According to Alvaro home buyers across the South are negotiating on average of 5% or more off sales price. In some cities as much as 10%.
How To Negotiate Buying A Home-Do your homework
One of the most important factors in negotiation for a home purchase happens way before you even make the offer. Say you find the right house in a neighborhood that fits your current and future lifestyle. Now it’s time to dial into the right offer amount for the home. This is where a local realtor can really paint a clear picture of how long the home has been listed for, what other homes close by that are similar have sold for in recent months and how motivated the seller is to sell can all lead to a lower price offer.
Just be aware that your realtor should be working in your best interests and not necessarily the best interests of the seller. Don’t just give a low ball offer without doing your homework first so that you can realistically justify your offer with some hard facts.
Know when to walk away from an offer and when to take a stand
When you’re negotiating a home purchase an offer you are always in a stronger position when you are pre-approved. In many cases, homes sit on the market for months and even years, so buyers are more likely to allow for a lower price offer that is not too crazy, especially if they see you are serious about the home.
Before you put your game face on and start working out an amount you think the house maybe worth based on your budget consider lowering the offer by 5% or more of the list price and stick with that price to start the bidding. The worse thing you can do at this point is to let your emotions get the best of you and pay the full list price or worse more than the list price of the home because you love it and you have let your emotions get the best of you. You need to think logically like Spock at this time. Keep in the top of your mind that there are dozens of homes on the market that will be a good fit for you. If the seller will not negotiate with you consider moving on to the next home.
Don’t let the seller see you sweat
In most cases, the seller is not really going to tell you honestly why they want to sell their house. Also do not brag about how much money you got pre-approved for because once the seller sees an opening you will lose your ability to negotiate a fair price for the home. When you start the process of negotiating leave the fancy car and clothes at home and dress as casually as possible. Because if the seller sees how wealthy you might be, you lose your ability to bargain a better price.
A good idea might be to meet at an unassuming location like Starbucks to start the offer. When you offer 5% below list value or more, you will most like get a counter offer that can be the sweet spot you were hoping for from the beginning based on what homes in the neighborhood were selling for. If the offer stays too high, move on.
If you truly love the home and the price is still under budget of what you have been pre-approved for and the seller will not budge consider asking them to throw in closing costs, repairs to the home and even realtor fees. While it may not be actual money off the list price, you’re still saving money on the home purchase.