Q How do I negotiate a price when buying a home?
A People who are ready to buy a house will find the current market to be quite favorable to them. Learning how to negotiate for a home in a buyer’s market will require that you approach this from a different perspective compared to buying in a seller’s market. Negotiations with a seller in a buyer’s market may be relatively easy, but it doesn’t mean that you take all concessions offered by the seller or that you make unreasonable demands on them either. The intricacies involved in home negotiations take an entirely different face in a buyer’s market.
First, you must research the local market. This is true especially in terms of finding out the data about sales-price-to-list-price in a specific area or neighborhood. This means finding out what the list price of the house is and how much it actually sold for. Research these important pieces of information so that you’ll have an idea how much owners of real estate in your target location are willing to sell below their listing price. When negotiating, you have to have a good reference point so that you can make an educated offer to the sellers of the property. Also, you need to compare prices of similar homes sold in the neighborhood. A Realtor can provide you with these numbers.
Try to minimize out of pocket costs. You can do this by asking the seller to make concessions in the form of shouldering some fees such as some or all of the closing costs, title insurance, home warranty and other items. Keep in mind that the longer a house sits in the market, the more willing a seller is likely to make concessions to a buyer. Checking how long a seller has been trying to sell a property can give you a wealth of information you can use during negotiations. Some sellers may even give you additional concessions such as covering your moving cost, throwing in some furniture sets that go very well with the color palette and style of the house, and the likes. When being given items to sweeten the deal, take a close look at the items and see if this is something that you want. A real concession that sweetens the deal is the true advantage, rather than just accepting a concession that doesn’t really do much for you.
Make sure you look at possible repairs and renovations needed. Take a look at the house and check to see if there are repairs that need to be done. You can add this as a contingency to a purchase agreement stating that you will only complete the sale of the house if the seller agrees to complete repairs needed and discovered through a home inspection. And sometimes homes need updating or renovations. It makes a lot more sense to buy a house that’s within your budget range which will allow you more financial leeway to accommodate some home improvements. And you can negotiate a better price if you are willing to take on the renovation and updating yourself. And it will make sure that you get the contractor of your choice who will work on a design and set of materials of your choice. Sellers will usually offer a better price concession than what it will actually cost to complete the projects needed.
There is no such thing as a “standard” offer. Each offer needs to be prepared for the particular needs of the buyer and the property. Most reasonable and fair offers presented will work out between the buyer and seller.
Get answers to questions you might have about real estate from Randy Durham, who is president of the Chattanooga Association of Realtors and a broker with Keller Williams Realty. His column appears on Sundays. Send your questions to Business Editor John Vass Jr. at jvass@timesfreepress.com