Buying a home can be emotional, but negotiating the price should not be. Though negotiation is an art and cannot be completely taught , here are some valuable negotiating techniques and other ways to achieve a winning real estate transaction.
Qualifying for a mortgage proves that you can afford a home and that your income is sufficient. Get this step out of the way early in the home-buying process, so you won’t encounter any nasty surprises when you start to negotiate.
The market dynamics describe the price signals that result from continual changes in the supply and demand of any particular product–in our case, between sellers and buyers. The foremost rule for negotiating property deals is to find out whether it’s a buyer’s or seller’s market. A seller’s market has fewer available homes, giving sellers the edge in price negotiations. A buyer’s market has more available homes than people interested in buying, so buyers have the edge in negotiations.
Public records and online real estate listings can help you research a seller, property, and neighborhood. Check if the house is in foreclosure or if the house has been in the market before and at what price. Gather as much information as you can before you write your offer. Don’t be shy about the kind of questions you ask, just be smooth.
If a home is priced at or below market value, you are unlikely to get it for less. If it is priced above market value and has been on the market for a while, a lower offer accompanied by a market analysis may get you the home. This is where a good agent is invaluable. They have the professional experience to assess whether or not a home is worth the original price and what factors might lower the price.
When you make your offer, make sure you put a time limit on it. If you are making an offer in the evening, make the expiration early the next afternoon; having a longer period just invites competing offers, which is exactly what you don’t want. Do not give the seller’s agent a chance to find someone else. If the owner is stuck on a price, you can make back some value asking for concessions, such as repairs, instead of asking them to lower the asking price.
A payment will be processed faster if you pay in cash or have a pre-sanctioned home loan. This gives you leverage to during the negotiation because sellers prefer buyers whose payment they can processes immediately. A seller in urgent need of funds will want the deal closed quickly. These sellers might be willing to cut corners, making a detailed negotiation is even more important.
As in any negotiation, know your goals and stick to them. Price is rarely the only factor at play in a negotiation, which is why you want to ask lots of questions about every aspect of a property and the market. But a good negotiator won’t get stubborn and risk losing the perfect house because of the need to win.