NEGOTIATING A HOME
Buying a home, especially for a first time buyer, can be a gruelingly stressful experience. There is so much to learn about the process, and a real fear of the unknown. Making a good, well informed deal for a home does not need to be nearly as stressful as it becomes for some people. The key is to arm yourself with information and take it slow. There is no rush and if someone that you are dealing with implies that there is walk away. It is much better to walk away from a good deal than it is to walk into a bad one because of ignorance and succumbing to pressure.
Here are some tips that you can use to prepare yourself ahead of time and to approach the people that you deal with, with a easy sense of confidence. The decision to buy a particular home is not based just on the price that you pay for the property, there are hundreds of terms that could be negotiated before a deal is done. You will probably deal with only a handful the most important factors being the financing and the results of your home inspection, whether the cost of repairs need to be figured into the final selling price.
Then there are those areas on any purchase contract that you don't understand. This is where a lot of stress comes into play. You need to be careful in these gray areas and make sure that you understand what you are agreeing with or you could find yourself agreeing to something that is not in your best interest. If you educate yourself with the language before you go to the table you can make yourself a deal that could save you hundreds if not thousands of dollars. Above all, don't be afraid to ask questions.
Tips for negotiating:
- Don't love a house so much that you lose yourself in a offer war. In other words be prepared to walk away if the seller refuses to accept what you can afford. If you love one home another that you love just as much will come along.
- Offer close to the sellers asking price. The seller could accept your offer outright or counter to get you to bid a slightly increased offer. This works well in an active market with decently priced homes.
- If the market is slow offer the most that you can afford. You might have to walk away from the deal in this case refer back to tip # 1.
- If you happen to fall in love with a home that you feel is overpriced and the market is slow bid low and be willing to offer more. By bidding low to begin with you give the seller the opportunity to show interest and ask for a bit more. You could wind up paying what you were actually willing to pay in the first place. This leaves everyone feeling good, you made a deal that you can live with and the seller feels that they negotiated you to a higher price.
- If the seller appears to be highly motivated you could use some terms such as repairs to bargain with. In this situation the seller could trade a lower selling price for you agreeing to take care of repairs that were found during inspection or a fast closing date. This tactic is most effective in a slower market.
- Do some research before you begin. Arm yourself with information. Take a look at the neighborhood, recent sales and selling prices. Another factor to keep in mind is how long the house that you are interested in has been on the market.
- When you make an offer try not to be too firm. Give yourself room to breathe. Part of negotiating is well, negotiating! Be willing to go up in price a bit. Keep in mind that a lot of sellers are trained to not ever accept the first offer from a buyer. You want the best deal for you and the seller wants to feel good about the deal that is struck too. Many times the sellers position is just as stressful and emotional as your position.
- Always be willing to walk away from a deal. Tip # 1 of this list is probably the most important piece of advice in this list. Don't get caught up in emotion and back yourself into a price that is too high or bad terms. Keep cool and calm and remember tip #1!!
- Do all of your negotiating in writing. Never agree to any verbal contracts with the seller or the sellers agent, NEVER. A standard purchase contract will not contain all of the concessions and verbiage that you want to be represented so make sure that these terms are written on the contract and that you have initialed beside each point before you sign on the dotted line. Also, if your offer is on the table and you hear from your agent that the seller will accept it if you change a couple of terms, ask for a formal counteroffer before responding. Sellers can only counteroffer with one buyer at a time.
What to do if you find yourself in a never ending offer/counteroffer situation:
- If you find yourself in a offer/counteroffer situation and you like the home enough to play a few rounds focus initially on issues that will be easily resolved. This is a old sales tactic, keep the customer saying yes so that they feel good before you close. How it works is this, you ask for things that the seller can easily agree to and he feels good about it then give him your final offer. After all of the agreeing he feels good about accepting your offer. This works well in most situations where a negotiation between two parties is at hand.
- Another effective tactic is to set a time limit. In other words if you find yourself going back and forth and you are annoyed give the transaction a time limit. Let the seller know that if the deal is not done buy a specific time that you will back out. This can be very effective but then again you might need to walk away.
- Sometimes if you offer a sizable final offer during heavy negotiations the seller will quickly agree to your out of nowhere jump in your offer. Think of it as a quick action and quick reaction.
- Offer to split the difference. Make an offer that is exactly half of the difference between what you've been offering and what the seller has been demanding.
- Give the seller two different scenarios to chose between. Make your two offers differ with regard to price and included repairs.
This is really good advice, and if you familiarize yourself with all of this information and use a Buyers Agent for your transaction you should feel really good about your negotiations. Once again, the best bit of advise here is tip #1, you can always and always be willing to walk away.
Good luck and happy house hunting!