All homebuyers are looking for a deal, which is why the negotiating process in a real estate transaction is so important. But getting the home you have your eye on at the price you’re looking to pay can be a challenge if you don’t go into the negotiations with a little flair.
You certainly need to employ a few tactics to help get the price down to what you’re willing to pay, and the following tips can help you land the best deal on a home.
1. Get Pre-Approved
Sellers prefer to deal with qualified buyers instead of tire kickers who might express an interest in buying a home but aren’t actually financially capable of handling a mortgage. Being pre-approved for a mortgage is always a good step in the homebuying process and makes you more competitive against other buyers and more attractive in the eyes of the seller.
Besides, a mortgage pre-approval will help you determine how much you can afford. That way you can focus only on homes that are within your price range.
2. Have Your Deposit Check in Hand
Not only will a pre-approval letter help show the seller that you’re qualified and serious about buying, attaching a deposit check with your offer will further seal the deal. Just make sure the deposit amount is enough to intrigue the seller and is in line with what deposit amounts are going for in your market.
3. Study the Market
The value of a home is directly influenced by the market that it is immersed in. Is it a buyer’s or seller’s market? Are homes appreciating in value, or are they stagnant at the moment? What is the supply versus demand profile like?
Identifying the temperature of the market you’re dealing with will help direct which way your negotiations should go and will help you stay in line with what the home you’re putting an offer on is really worth.
4. Go in With Comparables
You’ll have a better understanding of the market and will go in with more negotiating power if you understand how much similar homes in the area have recently sold for. Your offer should ideally be based on what the home is actually worth, and not necessarily what the seller listed it at.
Sellers can essentially list for whatever they like, but that doesn’t mean the listing price is an accurate reflection of what the property is worth based on the current market.
Based on the information you compile from the comparables, you’ll be able to make a sound and fair offer on the home. If the home is listed at market value, there is probably little wiggle room in the negotiation process. But if it’s listed above market value, you may be able to go in with a lower offer and use your research to back up your offer.
5. Find Out the Seller’s Motivation
If possible, find out why the seller is moving. Many sellers are not highly motivated to move, while others are. In the case of the latter, you might be dealing with someone who is eager to get the home off their hands. Whether they’re closing on another home soon or are in need to get out of town to start a new job, you might have a motivated seller on your hands who may be more open to negotiations.
6. Keep Your Contingencies to a Minimum
While you don’t necessarily want to completely expose yourself to vulnerability, you also don’t want to bombard sellers with a list of contingencies that will just complicate the offer. Too many contingencies will make the closing process more complex and time-consuming, which is never a good thing for sellers.
Contingencies play a key role in offers, so consider keeping them clean. The fewer the number of contingencies, the higher the odds of landing the house at the price point you want.
7. Separate Yourself From Emotions
It’s not uncommon for negotiations to get heated. After all, we’re talking about hundreds of thousands of dollars in a single purchase, so you want to make sure you get this right. Not only that, but sellers tend to be very protective of their homes and are not typically willing to hand them over at a price that they may deem to be unfit.
What sellers do is out of your control. But in your case, try your best to keep your cool and remove emotions from the equation. If you don’t end up getting the house, just remember that there will always be another one out there for you to put an offer on.
8. Accompany a Personal Letter With Your Offer
Sellers are understandably attached to their homes and don’t want to see it get into the wrong hands. Sometimes submitting a personal letter along with your offer explaining why you love the house and how you would turn it into a family home can be just enough to tip the odds in your favor and convince the sellers that you’re the right buyer for the home.
9. Use an Agent
Your best friend in a negotiation situation is a real estate agent. While you can learn everything there is to know about handling negotiations to land a great deal, letting a professional take the reigns can provide you with the best outcome.
Real estate agents are trained and experienced at handling negotiations. They’ll be able to help you find the right property and handle the entire negotiation process on your behalf.
The Bottom Line
When it comes to real estate transactions, negotiating is part and parcel of the process. But how you handle the negotiations can make all the difference in the final outcome. Get familiar with some savvy negotiating tactics that you can employ and team up with a seasoned buyer agent who can help you land the home of your dreams at a price point you can be happy with.