The traditional quote is that in real estate, everything is negotiable. But is it really?
When you go to buy a house, you’re certainly hoping to get the best price and terms. To do that, you need to know the start and end points of the negotiation. That begins with being familiar with the market.
The key to saving money when buying a home is sticking to a plan during the turbulence of high-stakes negotiations. The real estate agent who represents you can guide you and offer you advice, but you are the final decision maker.
Negotiating in a Buyer’s Market
It’s good time for you if you are buying in a buyer’s market as you have the power. This means there are more homes for sale than there are buyers to purchase them. For sellers, especially “motivated” sellers who have to move, this is critical. If you show interest, they won’t want to let you off the hook. You are likely to get more concessions and price reductions than they really want to give – because that is the only choice
Negotiating in a Seller’s Market
This is the difficult market for home buyers. You won’d have much importance as sellers generally have their pick of buyers to sell their home to. If your offer is not relevant, the seller won’t even bother negotiating. In a seller’s market, you need to propose an attractive offer that isn’t muddied by too many contingencies or demands. There should be a proper balance between the two.
Let’s find out some easy-to-use techniques to assist you in negotiating the best purchase price!
- A “Sure Bet”–Getting prequalified for a mortgage proves to sellers that you’re sure about buying and capable of affording their home. It will push you into the list of potential buyers. Sellers often go with buyers who are a sure financial bet, not those whose ability to pay for the property seems doubtful.
- Data Drilling–Your agent can help you understand the seller’s financial postition by finding more data about them. Are they facing foreclosure or a short sale? Have they already purchased a home or relocated? This may make them more eager to accept a lower price to avoid paying two mortgages. Fetching more information about the seller through your agent provides the “twin-tools” of negotiation: signs of eagerness to sell and a sense of which negotiating techniques may be most effective.
- Know Your Price Range-The perfect deal engages the enthusiasm of sellers yet keeps money in your wallet. Know in advance the most you’re willing to pay, and with your agent work backwards from that number to determine your initial offer. This can set the line-up for the entire negotiation. A too-low bid may offend sellers, a too-high bid may lead you to spend more than necessary in order to close the sale.
- Avoid Contingencies–Sellers prefer offers with a high probability of making a deal. Keep your bid free of complicated contingencies, such as making the purchase conditional on the sale of your current home. Do keep contingencies for mortgage approval, home inspection, and environmental checks, etc.
- Radical Approach–Buying a home is a business transaction, and treating it that way helps you save money. Consider even a slight movement by the sellers a sign of interest, and begin negotiating.
- Stick to Your Plan–Attractive homes and those competitively priced can draw multiple offers in any market. Don’t let competition propel you beyond your predetermined price or agree to concessions