Have you shortlisted the real estate property you wish to buy and are about to seal the deal? If yes, it's vital for you as a homebuyer to know some tricks related to price negotiation. And fortunately, we are here to help you! In this guide, you will learn some of the top price negotiation tips that every homebuyer should know.
When we talk about buying a home or real estate property, the home seller you're buying property from will probably expect you to negotiate the asking price. In fact, most home sellers price their homes at a bit more value than the market value. This is done to compensate for the negotiations. Although price negotiation can be intimidating, knowing what to expect can make the entire process a little less stressful.
So, let's start with the article and look at price negotiation tips. But before moving forward, you need to understand what you need to do before negotiating a house price.
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Before Negotiating a home price
Negotiating the price of a home requires a lot of organisation and patience, and many times, compromise. So, before sitting down to negotiate a home price, get the below-mentioned things in order:
1. Work with a realtor or an agent
Many homebuyers believe they no longer need a realtor or an agent to buy a house. But a real estate agent does not only show you homes but also plays a crucial role when it comes to negotiating the home's price. An agent further helps you decide how much to offer.
2. Get finances in order
As a homebuyer, you need to prove to a home seller that you can easily get a mortgage. Have you ever thought about what will happen if you make a homebuying offer without proof of funding? Well, in such a situation, you are much more likely to get passed over for the next homebuyer. So, it's important to get preapproved for a mortgage loan and get finances in order.
3. Know your market
While negotiating the home prices, it's always recommended to know the market. The amount of room you have to negotiate is inversely proportional to your interest in the home. This means that if many homebuyers have expressed interest in the house and there are multiple offers, you will have less room to negotiate the prices. Whereas in case your local real estate market is cold, you have higher chances to ask for concessions and lower property prices.
When you are done with all the things above, it's now time for you to learn the price negotiation tips that can help you grab the deal at a lower price.
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Essential Tips for Negotiating A Home Price
Once you are sure that everything is in order and you are finally ready to start discussing prices, consider some of the essential tips you can use at the house price negotiation table.
1. Make sure to get an inspection
It comes as no surprise that home inspection results can play a critical role in negotiating the home's final selling price. A property inspector will inspect a house for any problems like foundation cracks, issues with the ventilation system, heating, air conditioning and more. Later, the inspector will give you a copy of the home inspection report. If the home inspection reveals any issues that are deal breakers for you, you can ask the seller for concessions. You can even ask the seller to fix an issue, give you credit for closing costs or lower the selling price.
2. Always communicate through your real estate agent
As a non-professional in the real estate market, you might not know some real estate jargon. Some real estate jargon has legally sensitive definitions and is often confused with one another. For instance, many homebuyers don't understand the difference between an inspection and an appraisal. Therefore, it's highly suggested to ask your real estate agent handle all the conversations between you and the home seller. Your agent knows how to phrase requests and questions in a manner that does not put your interests in danger. It's advisable not to contact a seller directly.
3. Find out why the seller is moving
Finding out why the seller is moving can also help you negotiate the house price. The more detail you know about the home seller, the more effectively you can negotiate the house price. For instance, if your home seller is moving out of the house because they have bought a new house, you might be able to get a better offer by asking for a discount. However, in this case, you probably won't get repairs and replacements before closing because the seller likely wants to get out of the house as soon as possible.
Try to figure out if the seller prefers a longer or shorter closing process. If the seller is eager to sell the house, it gives you more room to negotiate the price, especially if the property has been on the real estate market for a while.
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4. Ask for closing costs
While closing the real estate deal, a down payment is not the only cost you need to pay. You also need to pay the closing costs. For your information, closing costs are the expenses that go to your lender in exchange for servicing your loan. Some of the basic closing costs involve inspection costs, appraisal fees and credit check fees. The closing costs on a house purchase is generally between 3% to 6% of your total loan value. This cost can potentially present a barrier between you and your house purchase.
As a homebuyer, you may not realise that you can ask for seller concessions beyond the price of your house. For example, you can ask the home seller to chip in if you wish to buy a home, but you are finding it hard to cover the closing costs. In some cases, the seller may agree to your point in order to close the deal faster.
5. Don't be afraid to walk away
In some cases, you will come across a home seller who does not want to budge on the price of the home. Such sellers have an endless number of offers or are very attached to the home. In these situations, it can be tempting to throw your budget to the wind and offer a price more than you can actually afford to win the bidding war. Moreover, this will force you to take on a higher loan, and you might even need to buy Private Mortgage Insurance before you close if your down payment is low.
So, always go into a home buying process, assuming that you need to walk away from every house you see. Try to attend multiple showings and avoid getting too attached to a particular house. This can help you stay within your budget and negotiate more effectively.
6. Show interest
Finally, contrary to a famous belief that being too interested in anything might restrict your chances of getting lucrative offers and discounts, a keen and curious homebuyer stands a higher chance of closing a real estate transaction. Real estate developers generally try and offer the best possible home buying option to the buyer if they feel that the buyer is actually interested in buying the property and not just exploring options.
That’s all! Negotiating a house purchase price can be intimidating, especially for the buyers who are buying a home for the first time. Make sure to get all the things in place before buying a house, and then get ready to use the tips stated above in order to grab the deal at the best price. Also, don't be afraid to walk away and keep hunting until you don't reach an agreement with a seller within your budget. Ready to begin your house hunt? Get in touch with us at +91- 8010820000.