Here are tips for negotiating the best price on a home.
1. Get pre-approved for a mortgage
Getting pre-approved (or better yet FULLY UNDERWRITTEN!) for a mortgage proves to sellers that you’re serious about buying and capable of affording their home. That will push you to the head of the pack when sellers choose among offers; they’ll go with buyers who are a sure financial bet, not those whose financing could flop.
2. Ask questions
Ask your agent for information to help you understand the sellers’ financial position and motivation. Have they already purchased a home or relocated, which may make them more eager to proceed? Has the home been on the market for a long time, or was it just listed? Are there other offers on the table or has the home been in escrow already? If so, why did it fall through? The more signs that sellers are eager to sell, the lower your offer can reasonably go.
3. Work back from a final price to determine your initial offer
Know in advance the most you’re willing to pay, and with your agent work back from that number to determine your initial offer, which can set the tone for the entire negotiation. A too-low bid may offend sellers emotionally invested in the sales price. Work with your agent to evaluate the sellers’ motivation and comparable home sales to arrive at an initial offer that engages the sellers.
4. Avoid contingencies when possible
Sellers favor offers that leave little to chance. Keep your bid free of complicated contingencies, such as making the purchase conditional on the sale of your current home if possible. Do keep contingencies for mortgage approval, home appraisal, home inspections and environmental checks typical in your area (like radon or mold) and to secure homeowner’s insurance.
5. Shorten timeframes or offer a rent back to the Seller
Try to sweeten the deal for the Seller’s where ever you can, especially if it will not cost you money. Ask the listing agent what the Seller is looking for in a transaction and work to accommodate them as much as possible. It’s not always about the highest dollar amount – a term in the contract may be more important to the Seller.
6. Try to keep a level head
Buying a home is a business transaction, but it can be emotional as this is where you and your family will live. Every market is different, but in a Buyer’s market, consider any movement by the sellers, however slight, a sign of interest, and keep negotiating. Each time you make a concession, try asking for one in return. If sellers won’t budge, you will need to decide how much the home is worth to you. Is it worth losing in the long run for a few thousand dollars?