Since buying a home is likely the most expensive purchase you’ll ever make, getting the right deal on your investment should be at the top of your list. Going in with a strategy is key, but there are many elements that can affect how you approach negotiating. The state of your local market, the seller’s situation, your personal budget, and the house itself are all determining, deal-making factors.
Understand The Current Market
Your first step to negotiating is to really figure out what the current situation in your local market is: Are homes being sold left and right? Or are they sitting on the market for longer than average? You need to find out what the current state of the neighborhood looks like, so you can determine if you’re in a buyer’s market, a seller’s market, or somewhere in between.
If you’re in a buyer’s market…
- Since there are more homes for sale on the market than people looking to buy them, you have the upper hand.
- Negotiate and go in with an offer below the original asking price.
- Ask for the seller to pay for closing costs and to include any extras you may want (like appliances and outdoor accessories) in with the sale.
If you’re in a seller’s market…
- If you find your dream home, you should act on it quickly and cleanly since the seller has the ball in their court.
- Make your offer as close as possible to the asking price, or hit the nail on the head and give them exactly what they’re asking for. In some cases, if your particular neighborhood is so competitive, you can increase your chances of getting the home you want by going in a touch above the asking price.
- Don’t risk negotiating for any seller-financed extras.
If you’re in a neutral market…
- Remember that the counter-offer process could take a bit longer, since the seller can weigh their options just as much as you can.
- It’s smart to equally negotiate on different aspects of the sale, such as price, closing date, and personal extras. Both parties should feel like they’re meeting in the middle, making compromises so both parties are happy in the end.
- Make an offer slightly under the asking price.
Do Research On The Comps
If you’re provided with a list of comparables, comps for short, including homes that sold for a way higher price than the asking price of the one you’re looking at, give them a closer look—they might not be so similar. Of course any great agent should have your best interest in mind, but they’re also only getting paid if the house sells (and the more money you offer the seller, the more likely they are to accept).
As a rule of thumb, be sure to stack your house up to its comps in terms of age, condition, and number of bedrooms. Understanding what the home is worth will also help you avoid putting in a lowball offer, which could insult the seller. Instead, you want to come off as a serious buyer.
Learn Why The Seller Is Selling
Often times, having this knowledge will help you negotiate another deal after submitting your first offer. Typically, the sellers agent won’t be quick to dish out the reason why their client’s house is for sale, but you can sometimes make your own judgement based on what you get back.
If the seller refuses to negotiate the listing price, they might not be in a hurry to sell or might have more attractive offers on the table. On the other hand, if the seller gets back to you quickly with a counteroffer, that’s a bit higher than your first offer but lower than their asking price, they may be in a bigger rush to sell.
Be Quick To Respond
Even if you’re confident that you’re in a buyer’s market, it’s still courteous to be as responsive and timely as you can when it comes to counteroffers and terms of the sale.
Also, the last thing you want is to be caught in the middle of a bidding war. You don’t want the seller to think you’re not a serious buyer, and you definitely don’t want them to have enough time to review a flood of new offers coming in—another buyer could swoop in on your deal and make a much more attractive offer.
Set A Deadline For Your Offer
This is where your boldness comes in—you need to make the seller believe that they’d be lucky to sell their home to you. If you don’t set a hard deadline for when your offer expires, it just gives the seller more time to mull over another counteroffer, or even enter a bidding war with other potential buyers.
You can even tell the seller that you’re looking at other homes, and are just as comfortable to go with an alternative option. Even if you’re going ga-ga over your dream home, remember that if you don’t have the absolute upper hand in the market, you shouldn’t show an emotional attachment to the home. A recommended deadline is 24 hours.
There’s More Than Just The Price Tag
In the end, sometimes a seller just won’t budge on a specific price. It’s hard to remember this when you’re going through the buying process, but selling a home can have a heavy emotional aspect for the owner, so don’t get offended or flustered if the negotiation doesn’t quite go your way.
Instead, remember that there are other things you can ask for that will still benefit you, like closing cost concessions or help with repairs. Your agent will help you exhaust all avenues, so don’t forget to look past the price tag of the home itself.
Pro Tip: Always communicate through your agent–that’s why you hired them! Don’t set terms by contacting the seller directly, for risk of a miscommunication or accidentally causing legal implications.
