Purchasing a home is often stressful, especially if it is your first. In fact, it is one of the largest purchases you may ever make in your lifetime.
However, exactly how large the purchase is more within your control than you may think. Successful negotiations can help you lower the purchase price you must pay. Negotiating is also a way to get other perks to help you save money on your dream home.
Blindly attempting to negotiate the price of a home you want is not recommended. When you do not know what the home is worth, you cannot possibly hope to make a reasonable offer. It is essential to do some research and truly understand the home buying process.
The more information you have, the more likely you are to have the upper hand in negotiations. When you feel informed and prepared, you can also go through the purchasing process with far less stress. Below are some ways to make sure you make the most of home price negotiations.
Learn About Finding a Broker
One of the first steps in purchasing a home is locating a real estate broker you can trust. A real estate broker advises you about market conditions and helps you negotiate with home sellers. If you are purchasing your first home, having a trusted broker is particularly important.
To find a real estate broker you feel comfortable with, ask as many questions as possible. The broker must openly answer any questions you have. Always request references to confirm the information from your broker.
A broker with a good track record is likely to readily volunteer such information. If you are still confused about which broker to hire, ask yourself the following questions:
- Am I comfortable talking to this broker?
- Does this broker seem confident?
- Is this broker willing to listen to me when necessary?
- Does this broker have enough assertiveness to tell me when I am lacking information or making a mistake?
- Does this broker seem honest and transparent or appear to be concealing information from me?
Why Market Research is Your Best Friend
Having a reliable real estate broker is helpful, but you must also accept responsibility for parts of the home purchasing process. One way you can participate is by examining the neighborhood for your potential new home.
First, examine obvious local market trends. For example, new construction indicates neighborhood growth. Proximity to shopping centers or other attractions also affects home values. The same is true when homes are located near recommended schools.
Examining the history of the target neighborhood is also important. Check public records to see what homes previously sold for in the area in the recent past. Consider the types of homes that frequently sell in the area as well.
For example, if condominiums are popular, their prices may be higher in the neighborhood you are looking at. Other types of housing may cost less. Combining your independent market research with advice from your real estate broker is the best way to maximize your negotiation potential.
How to Get Creative and Be Realistic
You may not want to submit a home offer because you think other offers are higher than yours. While this may be true, a little negotiation can put your offer ahead of the rest.
For example, the seller may wish to sell to you if you are willing to move in faster than other potential buyers.
He or she may also prioritize your offer when you agree to purchase the home in cash. Other bargaining options include:
- Agreeing to pay a high deposit amount.
- Allowing the seller to lease the property from you until he or she finds a new home.
- Offering to purchase furniture rather than requiring the seller to remove it.
When negotiating for your new home, you must understand the seller. A seller motivated by money may place a high value on an upfront cash payment. One motivated by a need to sell the property quickly may care more about convenience-related perks, such as you keeping the furniture. Adjust your negotiations around the needs of the seller for the best results.
How to Add Personal Touches
Sometimes a seller has a personal attachment to the home they are selling. If your seller has such an attachment, he or she is more likely to accept your offer when you make your intentions clear.
For example, sending a letter with your offer indicating your plans for restoring the home may make the seller more likely to accept your offer. You can also use a letter to help the seller get to know your family. Explaining your motivations for moving to the area or buying the specific home is an excellent way to get the seller emotionally invested.
Adding personal touches only works if you understand what the seller is looking for. Keeping the home as is motivates some sellers, while others are happier knowing their old home is being updated or renovated.
If a home has historical significance, you can motivate the seller by showing you understand the history and want to preserve it. Make it clear you respect both the buyer and the home. The seller is much more likely to do business with you over other home buyers.
Learn How Inspections and Appraisals Can Help You Seal the Deal
Another area where you have some negotiation room is during the appraisal process and home inspection. For example, a home appraisal may highlight problems the new home owner must address. Those problems can prompt the seller to accept your offer, even if it is lower than originally desired.
You can also offer to make repairs yourself if the seller accepts your low offer. It is also possible for an appraisal to affect your initial offer. If the offer is higher than the home is worth based on its appraisal value, you can save additional money by adjusting your offer to a fair value.
Whenever you attempt to negotiate based on an appraisal, the key is to do so politely. Make sure the seller knows you still love the house and think it has potential.
Pointing out flaws that need fixing is simply a way to illustrate the true current value of the home. Expressing interest in paying positive attention to the needs of the home allows you to present yourself in the best light compared to other potential buyers.