After putting much time and energy into searching for the perfect house, you’ve finally found the one. Now you’re ready to put a ring (read: down payment) on it. But before you say “I do” to your dream home, you’ve got to get through the negotiations.
Learning how to make an offer on a house can be daunting for first-time homebuyers, especially because many of the other things we buy have set prices — you can’t haggle on the price of gas, for instance. In the world of real estate, however, negotiation is a key part of the home-buying process.
Do your research
The first step toward success is to know your market. Keep an eye on what homes in your desired neighborhood are selling for — Trulia makes it easy to do this by simply turning on the “sold” filter to see past sales instead of current listings. Knowing final price points for homes in your area (taking into consideration price per square foot and amenities such as a pool) will help you be prepared when it comes time to make an offer on a house.
Get some help
Next, ask your home-buying partner for advice (that’s your real estate agent). Are homes in your desired area moving fast or sitting on the market for months? How far under or over the asking price have comparable homes in the area been selling for? What is the max price per square foot you should pay?
Know if you’re in a buyer’s market or seller’s market
In a buyer’s market, there are more homes available than there are potential buyers, and you’ll often have more room to negotiate a price. If the house you’re interested in is listed over market value, your real estate agent can advise how low under asking price to start your offer.
On the flip side, a seller’s market means the seller often has multiple offers, and if you try to play hardball, you may wind up losing the house of your dreams to another buyer who isn’t playing games. A seller’s market doesn’t mean you have no room for negotiation, however. Talk to your real estate agent about making a smart offer that will pique the seller’s interest. There are some creative options available: Write a letter to the seller, put down more money (say, 25% if you can afford it), or offer a quick close. Talk to your agent to figure out what will make you stand out.
Remember, your first offer is rarely the last. Negotiations typically go back and forth between the buyer and seller a number of times before both parties reach an agreement.