7 Real Estate Negotiation Tips from an Elite Agent for Buyers
Are you excitedly searching the internet for your first home, retirement home, forever home, transition home, a place to call home? Maybe you already put in a few offers on some of your potential dream houses – congratulations! Whether you are about to put in an offer or have already thrown your hat in the ring, negotiating the purchase of such a huge financial investment can be intimidating. Luckily, we have a comprehensive guide of 7 real estate negotiation tips from an elite agent for buyers to get you started.
What is Negotiable When Buying Your Perfect Home?
First, let’s talk about a very important thing. What exactly is negotiable when buying a house? It is essential to understand what is generally negotiable regarding residential real estate. When discussing the purchase details, you want to know what wiggle room you have. Let’s get started!
Yes, this one is pretty obvious, but the price is the first thing you negotiate. The seller wants the highest price, while you want to pay the best bargain price. Therefore, it is very common for a buyer to offer a lower price and a seller to counter until you find a number that works for both of you.
2. Closing Date
Typically, a seller wants to close the deal as soon as possible to stop paying for the property listing and get the sizeable financial sum coming their way. However, as a buyer, once you own the home, you become responsible for a whole new set of payments. Generally, a buyer will skip the next month’s mortgage payment after closing. Because of this, a buyer might opt to close at the beginning of the month to skip the following month’s mortgage payment.
3. Closing Costs
Typically, as the buyer, you will end up paying a prepaid closing cost for your mortgage. Whatever lending company you are going through will hold the closing cost in an escrow account. As the buyer, you can ask that the seller pay a flat dollar amount of a small contribution (usually 1-3%) towards your closing costs.
Look to see if the seller will include some staple appliances, such as the dryer, washer, refrigerator, microwave, and stove. Make sure to research the quality of the appliances by looking up the serial numbers. This gives you a good idea of how much the appliances are worth and how old they are.
Furniture that compliments the room or fits in funky spaces is negotiable. It could be patio furniture, the barbeque, a mounted television, or a unique rug. You want to ensure that the furniture you negotiated gets added to the final contract.
6. Home Repairs
Usually, as a home buyer, you have the advantage when it comes to negotiating repairs. After all, you are the one living in the home. It is crucial to hire a reputable home inspector to do a walkthrough. The inspector will look for any issues or repairs that might immediately cost you or be a hefty near future bill. It is helpful to add these repairs to the negotiating cost. Some sellers opt to sell “as is,” which means no negotiation regarding repairs.
Real Estate Negotiation Tips
Now that you know what is negotiable, let’s get started on those 7 real estate negotiation tips from an elite agent for buyers.
1. What Do You Want?
Successfully negotiating anything starts with clearly knowing what you need, want, and will pay. For example, knowing the answer to questions like, do you want a single-family home or a condo? Do you want a home in a busy city or an up-and-coming neighborhood? Are you looking for a ready-to-go home, or do you want to consider a home that requires renovations? Writing a detailed list of what you want in a home will help you narrow your criteria and negotiate more effectively.
Finally, decide what you want to pay right from the start. Setting your budget helps you narrow down listings and negotiate from the point of power – know what you can and cannot afford. A big part of this is being willing to walk away when a seller doesn’t negotiate for a price within your budget. While cash is still king, if you are like millions of Americans, a mortgage is the only feasible way to purchase a home. Getting a pre-approval will help your position in negotiations if that’s the case.
2. What’s The Seller’s Motivation Level?
A key part of the negotiation is understanding where the seller stands. What is their motivation for selling? Is it a rental investment or their personal home? Answers to this question will tell you if the house helps you understand if the investor will approach negotiations from a purely business or a more sentimental mindset. Exactly how long has the home been sitting on the market? The answer to this question tells you a few things. If the property was recently listed, the seller might not want to negotiate a lower price. However, if months have passed and the home is still on the market, the owner is probably desperate to make a sale.
3. What Does The Seller Need From The Deal?
Knowing and understanding what the seller needs to want to make the deal is essential. You want a win-win sale. Call the listing agent and inquire after the terms the seller needs to see to consider an offer. Instead of asking, “why is the owner selling?” it is better to ask leading questions to find out. For example, is the seller looking for a fast close? Are there any contingencies, such as them finding a new home?
4. Always Negotiate From a Win/Win Perspective
It is easy to enter into a negotiation like you are entering into battle. Of course, you want to fight for the best deal and don’t want anyone or anything blindsiding you! However, try to enter the negotiation process from the perspective of wanting both the seller and you to walk away feeling great about the deal! Think of how you would like a potential buyer to treat you when the time comes to sell your home. Try to enter into issues, questions, and potential problems with a solutions mindset instead of a “me versus you” mindset.
5. Use The Home’s Market Value Instead of The Seller’s Asking Price As Your Starting Point
It is tempting to lowball and make an offer that a seller will never accept. However, this strategy tells you nothing about how low the seller will go and what the seller is looking for. In addition, you might end up offending the seller, and they’ll likely simply pass on your offer — especially in a selling market. We know you want to pay a fair price for your dream home. Instead of using the asking point as the starting point for negotiation, calculate a property’s actual value. Then, opt to offer just below the minimum the seller will likely accept. This encourages the seller to either accept a little less than their minimum or counter with a slightly higher number.
However, know that it often requires an offer above the present market value in a hot market for you to win out other offers and walk away with the home!
6. Always Affirm
When you enter negotiations, it is important that everyone feels heard and welcome. Using affirming language can also make it seem like your ideas are the seller’s ideas too! It also makes sellers more receptive to your requests because they feel their requests are also heard and valued. Here are some examples of affirming language below:
- “You’ve done so much for us already, and I really appreciate it! Would you also consider ________?”
- “Your idea of splitting the cost of repairing the roof was great. How do you feel about dividing the appliances too?”
- “I was really impressed with your generosity towards the closing costs. I would appreciate your opinion on splitting the cost to repair ______.”
7. Always Try To Conduct Negotiations Face-to-Face Or On The Phone
If possible, try to meet in person or at least discuss details over the phone. Yes, texting and emailing are fast and convenient, but they both present endless possibilities for miscommunication and misunderstandings. When you meet in person or talk over the phone, it is easier to read someone’s emotions. An added bonus is the opposing side won’t have as much time to think or rework their offerings — they have to do it on the fly.
Have all your research ready when you meet virtually, in person, or over the phone. Make sure you know the details of the house, the market, and what you want. Doing your homework prepares you for any questions or tactics the opposing party might bring up.
Sometimes, It’s Better To Let The Real Estate Pros Handle Things
The process of purchasing a home is potentially overwhelming, and negotiating is intimidating. However, we hope these 7 real estate negotiation tips from an elite agent for buyers have helped get you started! We know that sometimes you don’t want to face the negotiation process alone. That’s why we have a team of professional, experienced real estate agents who will help you negotiate the win-win sale of your dream home, real estate investment, or retirement option! If you live in the Southwest Florida area and need a real estate agent, give Jim Westerfield’s team a call!