A: Just as you expect to negotiate when you go to buy a new car, you can expect some leeway in the final price you will pay for your new home. But negotiating for a house is a tricky process. It all depends on a number of critical factors:
- The condition of the real estate market in the area. In a 'hot' seller's market, several buyer may bid against each other and drive bidding above the original asking price. In a cold buyer's market, seller's may need to lower their price expectations as moving day approaches.
- The condition of the house. A seller who knows the property needs work may be willing to make financial concessions to enable you to do the work.
- The condition of your credit. Coming to the table with a strong credit report, cash in your pocket for the downpayment, and a pre-approval for the mortgage of your choice is an attractive benefit to any seller, assuring them that they can expect the sale to stick. In exchange for this peace of mind, they may be willing to accept a lower price from you than from a buyer who represents a greater risk.
- The concessions you are asking. If you need to move in before the seller is prepared to move out, or visa-versa, if you want to make the sale conditional on the sale of your current home, or if you are going to ask for a lot of repairs or changes to the property, don't expect as much in the way of price concessions.
Remember, negotiations are a package deal. Price is only one factor in the negotiation.
A Seller's Agent cannot advise you through the negotiation process, but a Buyer's Agent can work for you to help you start off with the greatest strength. A Buyer's Agent can also advise you about previous contracts on the property, circumstances surrounding the sale that might affect the sale price, and many other factors that could help you to negotiate a better deal. At minimum, a Buyer's Agent should:
- Help you learn the prices of similar homes sold in the last three months.
- Help you compare the merits and negatives of your chosen home against those of other homes you've seen.
- Help you assess the home's condition and any necessary repairs.
- Help you discover how long the property has been on the market.
- Help you find out whether the price has already been reduced.
- Help you plan a negotiation strategy, including opening and target bids, financial terms, and move in dates.
Negotiation strategies vary. In some cases, it will be best to starts with your best offer, while other conditions may dictate that you should save room to maneuver. In other situations, you may be able to counter a seller's higher price with non-monetary concessions.
To help you make the most of your negotiation, look for a Buyer's Agent who is a certified expert in residential real estate and very familiar with the area in which you want to make the purchase.
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