By: G. M. Filisko
Published: June 4, 2010
Keep your emotions in check and your eyes on the goal, and youâ€™ll pay less when purchasing a home.
Here are six tips for negotiating the best price on a home.
Getting prequalified for a mortgage proves to sellers that youâ€™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; theyâ€™ll go with buyers who are a sure financial bet, not those whose financing could flop.
Ask your agent for information to help you understand the sellersâ€™ financial position and motivation. Are they facing foreclosure or a short sale? Have they already purchased a home or relocated, which may make them eager to accept a lower price to avoid paying two mortgages? Has the home been on the market for a long time, or was it just listed? Have there been other offers? If so, why did they fall through? The more signs that sellers are eager to sell, the lower your offer can reasonably go.
Know in advance the most youâ€™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; a too-high bid may lead you to spend more than necessary to close the sale.
Work with your agent to evaluate the sellersâ€™ motivation and comparable home sales to arrive at an initial offer that engages the sellers yet keeps money in your wallet.
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. Do keep contingencies for mortgage approval, home inspection, and environmental checks typical in your area, like radon.
Buying a home is a business transaction, and treating it that way helps you save money. Consider any movement by the sellers, however slight, a sign of interest, and keep negotiating.
Each time you make a concession, ask for one in return. If the sellers ask you to boost your price, ask them to contribute to closing costs or pay for a home warranty. If sellers wonâ€™t budge, make it clear youâ€™re willing to walk away; they may get nervous and accept your offer.
Great homes and those competitively priced can draw multiple offers in any market. Donâ€™t let competition propel you to go beyond your predetermined price or agree to concessionsâ€”such as waiving an inspectionâ€”that arenâ€™t in your best interest.
Determine how much mortgage you can afford
Keep your home purchase on track
Plan for a stress-free home closing
G.M. Filisko is an attorney and award-winning writer who has to remind herself to remain unemotional during negotiations. A frequent contributor to many national publications including Bankrate.com, REALTORÂ® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.
Broker Salesperson with Murney Associates, Realtors