4 Foolproof Negotiation Tips for Homebuyers
So you want to get a great deal on your new home. Yeah, we know. Everyone does. How you go about doing it is important. It is a delicate process that requires resolute strength. And a talent for empathy.
Sellers are almost always willing to negotiate. If there are no competing offers, the most likely scenario is that you will get the home you want below listing price. How far below is up to you. And your agent. Find a good, knowledgeable one and lean on their experience(s)?. Don’t trust implicitly, but use their experience to supplement what you learn throughout the process.
For a leg up, read these 4 great negotiation tips for homebuyers.
Information is King
Why are the sellers offloading their house? Are the retiring? Looking to downsize? Have they run into some financial problems? You might not always get answers to these direct questions, but it almost never hurts to ask.
However, their reaction to your initial offer is going to reveal plenty. If they take their sweet time with counter and then respond that they won’t move off the listing price, they probably not in a hurry to leave. If you are not head-over-heels in love with the property, it might be best to move on.
If you get an immediate counter that gets closer to the middle between your offer and their listing price, you know that they are maybe a bit more motivated than most sellers. Could be a great opportunity.
Don’t lowball. This isn’t a showdown at the local car dealership. Lots of people have spent years and years in their home, investing not only their money and time, but real emotions. And emotional investment can be a tricky thing to deal with when buying or selling a home. This is one of the most important negotiation tips for homebuyers.
Most financial advisors would probably want you to look at a house purchase or sale as dispassionately as possible, in order to maximize your ROI. But we all know that people get irrationally attached to their homes. Be mindful of that when looking to make a first offer.
You know your budget and the listing price. Figure out what you think fair market value is and offer a price based on all those factors. Make it reasonable and there is a good chance that the sellers will be reasonable in return.
Always Be Ready to Walk Away
With all that wishy washy stuff in mind, you also need to be tough and resolute. Establish your ceiling in your mind before you start negotiating and don’t bend. Stay strong.
That might mean walking away from something that might be your dream house. But there is always another house. And this is a long-term purchase. Unless you are a house-flipper, chances are you are looking to be in a house for closer to multiple decades rather than multiple years. If you stretch and stretch and stretch to move off your number, you might end up with more house than you can afford.
Plus, as much as you might think the seller is sticking to their price, you being willing to walk away might be just the nudge they need to get to your number. Or closer to your number.
Get Ahead With A Specific Pre-Approval
General pre-approval letters are great and necessary to the beginning of the house-hunting process. They show sellers that you are serious candidates. Some of the most desireable properties won’t even show open houses, so they can weed out lurkers and those with pre-approval.
But once you find the right house, you will become much more attractive as a buyer with a pre-approval letter tailored specifically to that property. It makes you look serious and avoids giving the seller too much info about your purchasing power. Which puts you in that much better of a negotiating position. Watch this video for details on the pre-approval process or check out another post that delves deep into the process.
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