While searching for real estate properties, chances are that you might come across one or two that are just out of your financial reach. Those properties might be a fantastic buy, but if you can’t afford them, they’re out of your league, right? Not quite. If you’re smart and know how to do it, you might be able to negotiate house pricing to make them fit your budget.
Even in a seller’s market, it’s possible to find property owners who are open to home price negotiation. If you want to get a good discount on the house you want to buy, knowing the right techniques will help you save money while also reaching a happy medium with sellers.
Price is the biggest issue for many homeowners, so it’s naturally the aspect of the house that will be most heavily focused upon when dealing with the sellers. So here’s how to negotiate the house price down the right way:
1. Do Your Research
The first step to negotiate a house price down is to do your research. You should find out as much as possible about the home, the seller’s motivation, and the market. Your realtor will help you find out key stats through the use of comps as well as their own knowledge. Don’t be afraid to ask your sellers why they’re selling.
2. Consider Any Issues With the Home
The next thing you should do to negotiate the house price is to take a look at any issues the home may have. You will have an appraiser and an inspection to help you take note of these. By pointing out the issues to the seller, you can help negotiate the property price down.
3. Put Together Your Offer
Now it's time to start putting together your offer. Think about what you want to offer and how you can sweeten the deal. Can you offer a better closing timeframe? Are you willing to waive certain riders on the offer? If so, you might be able to use that to your advantage to get a better price.
4. Make Your Offer to the Seller
Make an offer for less than the home’s asking price, citing the issues. Your realtor will help you put it together in a way that will be tactful. Along with a standard offer, you can also include contingencies that will help protect you and the seller.
5. Negotiate the House Price and Reach a Deal
The final step is negotiating the home price with the seller and reaching a deal. The seller can reject the offer or make a counteroffer. You can choose to accept that counteroffer, refuse it, or make a counteroffer of your own.
When it comes to negotiating a home’s price, there’s a right way to make an aggressive offer, and then there’s lowballing people. It’s generally best to try to shoot for around 3 to 5 percent below the asking price. This is considered to be a reasonable negotiation goal and won’t insult your seller. If you feel you can negotiate a bigger discount, you should speak with your agent first. If you both believe a 10% or even higher discount makes sense, you should think about preparing a list of comps to show the seller, as it will help justify your offer.
Besides negotiating the home price, you can also negotiate other aspects of the deal. Almost anything you want can be negotiated with your purchase of the house, from who pays closing costs to credits for repairs and renovations. Some of the things you can put on the negotiation table include:
- Home upgrades, repairs, and certifications: If you would spend a pretty penny for the home’s repairs, you can put them on the negotiation table. Many sellers are open to repairing their houses in exchange for an offer. Or if you'd rather oversee the work, you can negotiate a seller credit for repairs.
- Closing costs: Don’t want to pay closing costs? You can always ask for the seller to cover them. This is a great way to score a significant discount as oftentimes sellers that might not want to come down in price will be more willing to cover your closing costs.
- Furnishings: If the homeowners have a particular cabinet or sofa that you really like, ask what it’d take to have that thrown into the deal. Some sellers will even include furniture as a “gift” to the new buyers.
- Closing or negotiation dates: Need a little extra time to make a decision? Want to look for a kick-out clause? These are on the table, too, and can be negotiated.
- The price: Unsurprisingly, the home's price is the most common item that will be negotiated during a real estate transaction.
This all depends on the market that you’re in, as well as the reasons why they may want to negotiate. Typically, discounts won’t be all that great, up to about 5% off the list price.
But some desperate sellers might go as low as 20 percent or more below asking if they need the home to go in a flash. However, most sellers are not desperate.
These massive reductions can also happen in the uber-luxury market where some sellers might overprice a house thinking they’ll find the right buyer.
The keys to getting the best possible deal on a house are to do your homework and to be flexible when negotiating. The more you know about the home and the sellers, the better prepared you’ll be to get the best deal on the house. It’s also important to be flexible. Sometimes you might run into a seller that’s fixated on the selling price, but they might be willing to pay some of your closing costs or to offer a credit for repairs.
These tips will help you get the best deal on your home:
- Ask your real estate agent what they think is feasible. Different markets will have different thresholds when it comes to feasibility. A seller’s market will be tough to negotiate in unless the sellers are extremely motivated. A buyer’s market might let you get freebies.
- Don’t be afraid to load up on contingencies. Contingencies are requirements that need to be met for a deal to pull through. They can include anything from having the closing costs covered to make sure that a particular broken window is repaired. Teaming up with your real estate agent can help you figure out what you bring to the table.
- Recognize what you have to offer the seller. If you’re paying cash, mention that. If you’re a very motivated buyer in an area where there isn’t much demand, remember that. If you’re willing to close soon, mention that too. Be sure to emphasize everything you bring to the table besides cash, when trying to negotiate the price of the house down.
- Remember that everything is on the table as long as you and the seller are willing to discuss it. It’s a good idea to ask if there are any dealbreaker requests or contingencies that the sellers won’t allow for this reason.
- Be willing to walk away. Sometimes, a good part of being a smart negotiator is realizing when the sellers are not going to budge and when a deal just isn’t worth making. If the sellers are not willing to work out a deal, don’t waste your time trying to convince them. Walk away and find someone who is.
If you notice that the sellers won’t budge from the asking price and are not willing to hear out any offers you make, there’s no point in trying to engage with them. On a similar note, if the home’s asking price is far above what its valuation is, you probably are wasting your time trying to make them be reasonable.
There are times where the decision to bail on a home is not exactly cut-and-dry. If you find yourself in one of these situations, the best thing you can do for yourself is reach out to your real estate agent and ask them their honest opinion.
When you’re on the hunt for a new home, it’s important to remember that you’re a buyer—and that means you have a lot of power. Even if you’re in a seller’s market, buying a home means that you can negotiate on how much you want to spend, what you get in your deal, as well as any special contingencies you want to make.
The best way to score a sweet deal on a dream home of your own is to do your research and to negotiate the price down with the help of your experienced real estate agent.