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You’ve finally found your dream home, but now you need to figure out how to pay for it. You have to come up with a down payment and cover closing costs. While it may seem daunting, you can lower both when you negotiate the house price. Most sellers are willing to at least look over an offer, so it’s well worth a try to save yourself some money now and throughout your mortgage. These tips will help you through the negotiation process.
- Know the Market
Your essential starting point for negotiating house price is to research the type of market you’re in.
A seller’s market means there are fewer houses for sale than people who want to buy them, meaning sellers can increase their prices and still make sales. In these cases, it’s challenging to negotiate. You’ll probably even need to pay over asking to get the house you want.
A buyer’s market is the opposite — there are more houses for sale than people who want to buy. This is the easiest market to negotiate since sellers will be more desperate to move their property. You’ll get the best deal if you’re buying in this type of market.
The last type is a balanced market where the houses for sale and potential buyers are roughly equal. Here you find longer negotiations with plenty of back and forth. Both parties will likely make concessions until you come to an agreement.
- Communicate Through an Agent
The best tool in your bag of tricks for pulling off a successful negotiation is to go through a real estate agent. When communicating with a seller, it’s essential to keep a poker face and not let on how much you love their house. Most buyers just aren’t capable of that level of discretion.
Your realtor has had lots of practice writing up and presenting offers, so using one of these professionals can save you a lot of time and money overall.
- Get an Inspection
Although it’s hard to spend more money when you’re already thinking of your down payment, closing costs and future mortgage payments, an inspection may save you a ton of money.
During an inspection, a professional will come to the home and look everything over for damage or shoddy workmanship. Any deal breakers they turn up are potential dollars back in your pocket. You can request the owner fix them before you buy or ask them to pay for closing costs or negotiate the house price.
- Prepare Your Finances
You should also work with your bank to get pre-approved for a mortgage. In some instances, there may be more than one offer on the house. You should do everything you can to give yourself an edge.
Homeowners appreciate a buyer who comes in with their financing all prepared. They’ll be more likely to negotiate with someone they know can afford the house and follow through with the sale.
- Make a Reasonable Offer
Most sellers will expect you to negotiate the house price to some degree. However, you don’t want to come in with a drastically low offer. Anything more than 10% lower is likely to offend the seller. They may not even get back to you. The only caveats are if the seller has priced way over their market value or the inspection turned up a need for extensive repairs.
- Ask for Seller Concessions
When you negotiate the house price, you can ask for a discount in more than one way. If the seller is unwilling to bring down the asking, they may agree to cover closing costs. Another possibility is to ask the seller to make specific furniture or decor pieces part of the sale. For example, perhaps you can’t envision the living room without the current sectional and accent chairs.
- Know When to Walk Away
Unfortunately, you should enter every negotiation assuming you’ll have to walk away. This frequently happens, and it’s best to prepare yourself. The seller may be unwilling to negotiate house the house price. They may have received other offers higher than yours. You may also walk away from the deal if the inspection turns up more damage than you want to deal with. In each of these situations, dust yourself off and try again fresh with a new home.
Negotiate House Price to Land the Right One
While it’s good to know when to walk away, in many situations sticking with the counteroffer process will help you score the home of your dreams at a price you can afford. Most buyers will entertain a reasonable offer, so ensure you don’t come in so low it’s offensive.