- Real Estate
The Art of Negotiating a Home Purchase
The art of negotiating is not all lost in the modern age of home buying. It still has a place in the lives of many buys and sellers trying to get the best deal that they can on a home. Most of the time this relates to buyers because after the sale there will always be a little niggling in the back of their mind that questions whether they could have gotten a better deal. Even if, the price paid for the home was a fair market value there will always be a little what if question. But, I’m going to help you by showing you some things that you can do to ensure that you have gotten the best price possible for your new home.
1. Be prepared to walk away.
The perfect home is just around the corner for many of us. Our emotions will always be running high and we have to maintain a logical look at the negotiating. Do not let your emotions rule over you while negotiating for the home purchase price. The home might be a complete dream home with the perfect kitchen, amenities, design and all the other options you are looking for. But, if you let your emotions run while negotiating the best deal you will end up having buyer’s remorse because you will over pay. So, when negotiating and asking the seller for the maximum amount of concessions in the sale, if they do not meet them then be prepared to just walk away.
2. Do the numbers again and again.
Buying a home is probably going to be the single largest expense that you will ever incur in your life. Making sure you do not overpay for the home of your dreams is essential. So, the first thing when looking at the numbers in front of you is to make sure they are accurate. Then add them up again and again, make sure you are consistently getting the same number.
Second when doing the numbers is to research about home prices in the area. If the last house n the neighbor hood that was similar to the one you are considering was sold for ten thousand less. Make sure you ask yourself why? Did it have fewer features? Are the sellers trying to make more profit? Are there taxes assessed differently on that side of the neighbor hood? It is essential to find out the answers to these important questions before you submit your bit. This way you can ask for the maximum amount of concessions and if the sellers refuse you have the opportunity to walk away.
3. Drive by the comparable properties
Before you decide to make the initial offer take a look at the comparable properties that you found inside the same neighborhood. Be sure to check the photos in the MLS systems that are available. Take a drive to around the neighbor hood and take a look at these houses. Some of these comparable houses in the neighborhood might just be the ones from your initial tours. If, you need to go and see the same houses several times to make comparisons do not be afraid to ask. This can go a long way in determining the best selling price for the house you are going to make a bid on.
4. Determine a price.
Once you have answered the above questions with research and final numbers. At this point you will have a very comparable idea of what numbers the house is going to sell for. So, getting the right price fro the home is the determining factor at this point. For example if a comparable home sold for ninety five percent of the actual asking price. Then your maximum limit should be no more than two percentage points higher than ninety fiver percent of the asking price in this market. Another factor you may want to consider on your initial asking price is how long the home has been on the market. If, it has been on the market for a good period of time you may want to only ask ninety percent of the initial asking price. If the sellers refuse your maximum bid the first time including an concessions then be prepared to just walk away.
5. Set a tone with earnest money.
The whole idea is to give the sellers your best asking price up front so that they will sell the home to you and get the contract rolling. One way to help entice them is with something called earnest money. So, when you are submitting your bid for the home the sellers will receive this money on top of it only when they have agreed to sell the home. The usual amount of earnest money is up to about twenty five hundred dollars. This earnest money works great for buyers because it lets the sellers know you are a serous buyer. These types of offers usually work really well with buy owner contracts among other. But, if you have still put in your maximum and the refuse the offer then its good to walk away and keep searching for the perfect home.
6. Set an expiration date for your offer.
When submitting a bid on a home for the purchase it is always a good idea to put in an expiration date on the offer. The expiration limits the amount of time that a seller has to accept your offer. This gives the buyer a little leverage because the sellers do not have an unlimited time to compare multiple offers. This will lead to a better price and more concessions when the seller accepts your offer.
7. Ask for financial concessions.
We are currently in a buyer’s market and it will continue to be for the next several years. This is a great bonus for those that are buying the homes. Because, with the market being a buyer’s market the buyers have more choices to ask for more concessions and lower prices from sellers. For example, when conducting contract bid it is not reasonable to ask the seller to cover the state and city taxes, inspection, appraisals or simply money you would like back at the negotiating table. You can also ask the seller in these terms to repair any faulty appliances, carpets, walls, décor that you feel is a hazard from the initial inspection. This helps the buyers get a great home for the very best price that is available.
Always remember you have the option to walk away. Keep your emotions in check and see if you have all the numbers and information you are going to need before you place your bid. Then you will have truly mastered the art of negotiation.