Buying a home? You want the best price, and these real estate negotiation tips will help get you there.
Whether this is your first time buying a home or you’re a practiced hand, these best practices are good to revisit in the search for your dream home.
Here are the 10 best tips to get a home at a great price.
1. Get your financials together
Before you reach out with an offer, make sure you've been pre-approved for a mortgage. Not only does this show that you’re financially prepared to follow through on your offer, it illustrates you’re serious and have taken the initiative in the process.
Plus, you’ll be one step ahead of your competition.
In addition to getting your credit report squared away, don’t forget to start saving up for a down payment. Your down payment savings goal should be at least 3% of the total, but try to save as much as you can.
Having your finances squared away will put you in a more secure position once you enter negotiations.
2. Figure out everything you can about the house you’re considering
The good news is that you have plenty of tools at your disposal to find out the essentials about the house you’re looking to purchase. When you work with a realtor, he or she can pull together the comparable sales to determine whether the list price of the homes you're considering is accurate. You'll be able to see how long the homes have been on the market, property tax history, what improvements were made and when, and other valuable information.
Knowing all of the details--especially the true market value of the house--makes it that much easier to make a spot-on offer that will hit home with the owners.
3. Get the home inspection
When you came here looking for real estate negotiation tips, you probably didn’t expect to hear one so obvious. We just can’t stress enough how important a home inspection is when it comes to negotiations! Not only can it eliminate headaches down the road, it can impact the price of the home itself.
An inspection will reveal any minor and major defects in the home. High price repairs like a roof replacement, an aging furnace or hot water heater will prove to be key leverage items when negotiating the ultimate price. Likewise, cosmetic imperfections or low priced repairs aren't worth haggling. Keep in mind, good faith bargaining reaps benefits when the sale comes to a close. The sellers will be much more willing to help you if post-sale issues arise. If you get too nit picky, they may not be as receptive.
4. Do your homework on the seller
With a little bit of detective work, you can find out vital information on the seller that could be useful in negotiations.
Some special circumstances to keep an eye out for include:
- Days the home has been on the market
- Whether the seller is still living in the property
- The property is in foreclosure
- Family needed to relocate for work or space reasons
All of these factors can influence your negotiation strategy, as well as the offer you make.
5. Focus on the big picture
Barring any major findings from the inspection, don’t get caught up in the small or minor flaws that mask a good find.
Whether the avocado kitchen or dated vinyl flooring has you reeling, cosmetics are not important enough to influence negotiations. It's important to look at the whole property and not get bogged down on inconsequential items that can easily be fixed.
By all means, keep track of your grievances or take note of a detail you’d like to copy. Just don’t let something minor throw negotiations off course.
6. Move quickly
In most housing markets, you’ll have competition for great homes, and Denver is certainly no exception to that rule. Once you find a house you love, get started on an offer immediately.
Remember -- you should have all of your financial documents ready to go in order to facilitate the process. Also, be prepared to respond to counteroffers. Determining a rock-solid budget ahead of time can save you a lot of time and headache once a counter comes through.
All of the hard work you’ve put in up to this point can be ruined by not being prepared at such a pivotal point in negotiations.
7. Expect to compromise
In both your negotiations and your house hunting, it's a guarantee you won’t get everything you want.
Decide exactly what your “non-negotiables” are and stick to them. Outside of those top priorities, be willing to give and take in order to make the best financial decision.
8. Know with whom you’re working
Some sellers are trying to sell without a real estate agent so be sure to keep an eye out for sales by owner. Alert your real estate agent if you’re interested in a house for sale by owner and adjust your strategy as needed.
Whether both selling and buying parties have agents or not, be sure to respect the unspoken rules of real estate negotiation. Don’t contact a seller directly. Having a real estate expert on your side to mediate the process helps keep the the negotiations moving and achieving your goal.
9. Make it personal
Once you’ve gotten pre-approved for a mortgage, found the perfect house and are ready to make an offer, consider writing the seller a personal letter. Think of it as a simple way to make your offer more human.
You can include details on why the house will be perfect for you and/or your family, all while showing some of your personality. Similar to a cover letter, a personal letter to the seller is not required but highly encouraged. It also is yet another tool that you can use to stand out in a competitive market.
Important to note that you can also use a letter to the seller as an explanation of your offer to drive home the research you have conducted. It's a tip worth considering if you think you've found your dream home.
10. Be positive throughout the negotiation process
The negotiation process can be stressful and time-consuming.
If you follow these real estate negotiation tips, you’ll be on your way to making a great offer. Our brokers here at Usaj Realty are expert negotiators and will help you with every step of the way and negotiate the contract on your behalf, keeping you involved in any decision-making 100% of the way.
Don’t lose sight of your goal, even if the process gets a little bumpy. Keep a level head and stay optimistic about the outcome of the process.
These real estate negotiation tips will help you navigate this intimidating process and put you in a great position to snag your dream home.
We're excited to help you begin the journey to your next home. Contact us today to see how we can help you.
(Editor's note: This blog was originally published in January of 2017. It has been edited and updated to provide current trends).