If you want to negotiate the best possible price for your new home, these strategies can help.
One of the primary hooks of Donald Trump’s Presidential campaign has been that he is a master negotiator. Regardless how you feel about Trump’s policy positions, it is a compelling angle for a candidate to take because negotiation is a skill that everyone would like to have – especially when buying a big-ticket item such as a home.
You obviously can’t get the seller to just keep knocking down the price more and more, though. You have to understand reasonable parameters. Researching prices in the neighborhood is essential.
Keep in mind the obvious: it’s easier to negotiate in places where there is less competition for the available houses.
Homes are not selling as quickly now as they did in 2013, when the market was really cranking. Buyers essentially have more room to negotiate. However, the seller still does have the upper hand, according to Redfin agent Jordan Clarke of San Diego. “Buyers have a little more breathing room, but they’re still not in the driver’s seat,” he explains. “If there’s anything under $700,000, it’s off the market right away.”
Many people think that they don’t really need a real estate agent because they can get all the information they need on the Internet. However, agents do excel at negotiation since they consider the home market professionally and on a daily basis.
Whether you use an agent or not, here are a dozen tips so that your homebuying process is successful:
Get pre-approved for a mortgage.
You want to be able to show your agent that you are ready. Many professionals won’t take homebuyers out to properties until it’s clear they are prepared to buy. Get preapproved.
It really can be tedious and annoying waiting to get a mortgage in place, so you want to get that process underway from the beginning, explains Paula Pant in Time. Preapproval alone can take one week to a few months.
Run the numbers before you get concerned about a few thousand dollars.
Typically a $5000 difference in overall home price represents about $20 per month in mortgage payment. It may not be worth doing battle for that slight reduction.
Act quickly if you find “the one.”
In competitive markets, houses will sell incredibly fast. Don’t skimp it if you feel that a place is really special, says Brendon DeSimone, author of Next Generation Real Estate. Chicago broker Sheila Rugege Dantzler agrees. “There will always be people who want to make a lower offer,” she says. “When they miss out on the first or the second or the third property, they learn their lessons.”
Also along these lines, remember that price isn’t everything. Amy Fontinelle of Investopedia notes that paying a little over market price for a home won’t be that big a deal if you’re really in love with the property.
Your offer should reflect the actual value.
Obviously you want to negotiate, not just throw your money on the table. What you want to offer is the actual value of the home. If the home is higher than the true market value for the neighborhood, you want to submit an offer that is below that amount accompanied by a market analysis (which can be prepared by an agent).
You won’t necessarily be able to renegotiate following the inspection.
If you discover a significant issue during the inspection, it’s reasonable to see if you can get a reduction. Don’t expect the price to necessarily be discounted, though. Your best bet is to get a credit at closing and bring in your own people to do the work.
Make all the requests you want.
Don’t hesitate to ask that repairs be made. Make those requests following inspection, says Clarke. You will typically get more by asking for more.
Understand why the seller is going someplace else.
Collect whatever information you can about the seller. If you know about them, you know how to negotiate. For instance, is there a divorce involved? “You have to ask a lot of questions of the listing agent and the seller,” explains DeSimone. “The more you know about the seller, the better strategy you can put together.”
Do as much research as you can.
Your best bet to find information is not just listings but public records. Find out whatever you can about the seller and neighborhood. Determine if the property has been up for sale previously and what the price was at that time.
Don’t forget compromise.
Be ready to compromise on how much you pay, square footage, or where the house is located. Sure, you can negotiate, but flexibility is also essential.
Interiors can be modified.
Keep in mind that many minor items on the inside can be easily changed.
Write a letter.
You may want to include a personal letter when you send your offer, says Clarke. “It puts a face and a picture and a story,” he says. “People want someone like them to enjoy the property as much as they did.”
Use search portals that have extensive information.
Clearly you are looking for a home, not just a property. Since that’s the case, you don’t just want the basic numbers on the building but a sense of the neighborhood amenities so you can know the location will fit your lifestyle.
You also just generally want your time to be treated with the respect it deserves. At Realty.com, you can find everything in one location: real estate professionals, available properties, market stats, local amenities, school information, and mortgage rates.