Purchase negotiations can be intimidating for many first-time homebuyers. Prices, property values, repairs, closing dates and other variables all factor into homebuying negotiations.
How can you prepare for negotiations and improve your homebuying confidence?
Do Your Research
Try and discover why the person is selling his or her home. Does the seller already have a new home? If so, the seller might be looking to close sooner than later, which means you might want to put together a strong first offer. Or perhaps the seller hasn’t found a new home yet and will sit back and let plenty of other offers roll in. The more you know about why the home is for sale, the better you can strategize. Asking questions of the seller and listing agent is an important step.
Don’t forget to look at the surrounding properties and overall neighborhood. You can even use Google Street View to get a better idea of the surroundings. Determine whether the house has been on the market before and at what price. The more information you have on your side, the more confident you’ll be as a buyer.
It Doesn’t Hurt to Ask
Maybe you don’t feel like you could convince the seller to make some needed repairs, but don’t let that stop you from asking. After an inspection, don’t be afraid to ask for some concessions. Know that you may not get every wish fulfilled—especially in a tight market. Even if the seller doesn’t agree to make a major repair, you can try and earn a credit during the closing process.
Some homebuyers will have an inspection done before placing an offer so they can avoid contingencies later.
Utilize Home Value—Not Price Listings
Don’t assume you should base your negotiations off of the listing price. If a home is listed above market value and has been sitting on sale for a while, a good agent with solid market data can get you better leverage in asking for a lower price.
Have Your Finances in Place
A big part of this is getting a mortgage preapproval. It can take some time, but this gives your offer greater strength and appeal. Some agents require a preapproval before they will you show any homes.
You can look for years and never find the absolute perfect home at the absolute perfect price. You’re likely to find yourself compromising on something. Price, size and location are three big areas where compromises occur. Do a little prep work by formulating a list of compromises you’re willing to make. This way you won’t find yourself getting caught off-guard in a crunch decision time. Keep this in mind when you head into the market.
Don’t Underestimate the Terms
Many people focus on the listing price, but the terms of the deal are just as impactful. Making larger downpayments, accommodating the seller’s closing date or letting some décor and repair contingencies go by the wayside can greatly assist in moving the process along and winning you the home.