Maximizing Home Buying Power: Effective Strategies for Negotiating the Asking Price
When buying a home, negotiating the price may feel taboo or uncomfortable, but it's a common practice often expected by the seller. With the right strategies, you can walk into negotiations confident and prepared. Here are some helpful tips to help you negotiate the asking price and more as a buyer.
What to Do Before Negotiating A successful negotiation starts well before making your first offer on the house. Get a preapproval letter and a clear idea of the home's actual value. Don't just take what the home is listed for; instead, understand its worth based on recent comparable sales and local market trends. Apply for preapproval with multiple mortgage lenders to get an estimate of your loan amount and mortgage rate based on verified income, creditworthiness, and other financials. You can then work with a real estate agent or use websites like Zillow.com or Realtor.com to research your local housing market and get an idea of how much the home is worth.
How to Negotiate a House Price There isn't just one way to negotiate a home's price, and certain situations call for different strategies. However, these tips may increase your chances of success:
- Work through an Agent: The best real estate agents are experts in the local market and the home-buying process. Find a real estate agent through referrals or a local online search. Verify the agent’s license through your state’s real estate regulatory agency.
- Prioritize an Inspection: While a home inspection is not always required, it can be critical when negotiating the house price. An inspector can highlight anything from minor inconveniences to major foundation problems. Make a list of significant issues, especially those that impact the property’s value or your safety. You can use the inspection report to ask the seller to pay for repairs or come down on the asking price to cover the cost. You can also include an inspection contingency in your offer, which lets you walk away if the inspection reveals major damage to the home without losing your earnest money deposit.
- Consider Seller Concessions: Repairs aren’t the only costs a seller may be willing to cover. You can ask them to pay some of the closing costs, such as origination or appraisal fees. Other seller concessions worth exploring include prepaid property taxes, a home warranty, and even discount points to lower your interest rate. There’s a limit to how much a seller can cover, and it varies by loan type. Ask for seller concession with discretion; asking for too many can backfire, especially in a seller’s market.
- Negotiate on Items Other than the Price: Some sellers are willing to strike deals on certain fixtures or furniture used during staging. You can also use the time to close as a negotiation tactic. "Another smart move is to offer a faster close," said Adriana Trigg, licensed Realtor and owner of Legionary Real Estate Investing. "A seller who’s relocating or juggling multiple properties might take a slightly lower price if it means fewer headaches."
How Much Can Buyers Negotiate? A seller’s asking price can depend on many factors, such as the local housing market, the property’s condition, and the length of time it has been for sale. For example, asking for 20% below the price is generally considered a lowball offer, but it may be appropriate for a home that needs a lot of work. A buyer looking at a home in good condition should probably ask for no more than 10% below
