Do They Like Me?
This may seem like a silly question, but it might save you money on your new home. Psychologically, people are normally attached to their homes, especially if they’ve lived there for more than five years. Subconsciously, most sellers want the home to go to someone they like. It might not be a bad idea to attempt to bond with the sellers.
This doesn’t mean you should take them out for drinks. In fact, you might never actually meet the sellers if everything is done through the agent. However, you could include a letter with your offer. Introduce yourself, discuss your family, and your reasons for needing a new home (if those reasons might make the seller feel more favorably toward you). Just make sure you praise the house too much. If the sellers get the feeling that you must have that particular house, they’ll have the advantage.
What is it Really Worth It?
Before making an offer, it is important to realize that the sellers may be overpricing their home in order to make a better profit. Ask your real estate agent for a Comparable Market Analysis (CMA) to put the price in perspective. The CMA will analyze other similar homes in the neighborhood and allow you to get a feel for what other sellers are asking.
You should also take the time to visit other similar homes. You might gain some valuable information that you can use during your negotiations. If other homes have upgraded kitchens and bathrooms, but the home you’re looking at is still stuck in the 1980s, you can use this to save thousands of dollars.
What Are My Priorities?
Don’t fall in love with the house too soon or you’ll put yourself at a disadvantage. Use the CMA to detail a list of homes that are in the same price range but in better condition or have additional amenities. List this because part of your arsenal. You can show the sellers that they are overpricing the home and get a better deal.
You also need to decide what you’re willing to fight for. If you give up a few extras, you might save thousands. Perhaps the sellers will accept a lower offer if they get to take their appliances with them. Be ready to compromise if you want the best price.
Why Are They Selling?
Understanding why the homeowners have chosen to sell their home is a great way to put yourself in a better bargaining position. Your real estate agent might be able to help you discover the reasons behind the sale, but you can find out a lot on your own.
Sometimes, the homeowners will be upfront and honest about their reasons for selling. Other times, you’ll need to do some investigating. Ask the neighbors casually and you’ll often discover a wealth of information. Sellers who are relocating due to a new job, a divorce, a death, or even the loss of employment will be more motivated to sell. Sellers who are simply throwing their house on the market and will sell if the price is right are harder to bargain with.
What Should I Offer?
People often assume that they should offer something incredibly low at first, giving themselves room to negotiate up. This sounds like a good idea in theory, but in practice it can backfire. While you should definitely give yourself some breathing room and make an offer below what you’re actually willing to pay, make sure your initial offer is still fair to the sellers. You want the sellers to make a counteroffer, and an offer that is too low may be rejected out of hand.
When Do I Walk Away?
Try not to be in love with the house or it will be harder to walk away. Decide exactly how much you’re willing to pay in advance, and stick to that price. If the counteroffers really put you off, be prepared to walk away. You don’t need to be overpaying for that house.
Walking away is harder if you’re emotionally attached. If you find that you love the house a little too much, ask your real estate agent to handle the negotiations. Give the agent your maximum price and let him or her handle it from there.
Negotiating a fair price for a house you’d like to purchase can be both stressful and difficult. Keep a level head, clarify your own position, and enlist the aid of a qualified real estate agent if necessary, and you’ll soon find that the negotiation process becomes much easier.
