Negotiating an Offer

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You found the perfect home and you want to put an offer on it. Before you do that your real estate agent will talk to you about the a good strategy  for negotiations to help you get the best possible price for the home.

There are a lot of things to think about. Do you start with a low offer and expect the seller to counter back up in price? Do you offer top dollar and hold your ground or are you willing to be flexible on the price? How can you help ensure that you have the best option and not lose the house?

An experienced and knowledgeable agent will be able to guide you through this process and give you the best strategy when it come to making and negotiating an offer.

Negotiation Basics

While there are no guarantees with any strategy you choose, you can do some things to give yourself the best advantage you can.  You should be prepared for the unexpected, as every seller has different priorities and needs and temperaments. Sometimes even experienced agents who are excellent negotiators can be suprised.

You have to remember that you will get a good price on your home, but will most of the time you will fall within the typical price range for the area and home. You might get a below average price on a home with certain types of properties like foreclosed homes or a short sale property, but these come with other risks and may not end up being the bargain you thought they were.

You can improve your chances  when you find the right home by following a few simple tips.

First Impressions Matter

Even with a solid offer that stands a good chance of being accepted, the seller and the listing agent have formed an impression of you and what you are like. This can be from things that were saidor how you reacted to the house during the showings and how you present yourself with the first offer. Most sellers have an emotional attachment to the home and may care about the house and who is moving in after they leave.

Some tips to make a good first impression:

  • Make a connection. Your real estate agent will do most of the communicating with the seller's agent, but sometimes a short, sincere letter to the seller, introducing yourself, and explaining how much you love their home can make a big difference in the negotiation process.
  • It is important that you have your pre-approval for a loan done and ready to include with your offer to demonstrate that you are a serious buyer and can get the loan required.
  • Include earnest money (deposit) with your offer and make certain the check has all the funds ready and available for when it is cashed.
  • Be flexible with details like when you will close on the house. If the seller wants to close a little faster than normal or wants some flexibility on when they must be out, accommodate their needs as much as you can. This creates a feeling of good will and can improve any negotiations later on in your favor.

What to Know About Going In Low

A "lowball Offer" is one that is drastically lower than the sellers asking price. Typically this is anything outside 10% of the asking price although depending on the home this may vary  somewhat.

Your real estate agent will be able to give you general information about the property or anything they may have seen during the showings that you should be aware of that may affect the offer price, but keep in mind a lowball offer may upset most sellers.

WHile sending in a lowball offer may seem like a good strategy, more times than not the tend to backfire on the buyers and result in an offer getting rejected outright.

 

Some Possible Reasons For A Rejection:

  • Keep in mind that though they are moving, this home is part of the seller's life and family. They may be very insulted by a lowball offer.
  • The sellers may not think you have strong financial situation. If you can only offer less than the listing price, perhaps you do not qualify for more.
  • Their listing agent will probably advise against it: Remember, the listing agent's job is to advise their clients to get them the most money, as well as sell the home in a reasonable amount of time. The agent also makes more when the home sells for more. A lowball offer is not good for the listing agent or the seller.
  • The sellers may have a mortgage to pay off and can't even consider your offer: For example, if the sellers still owe $200,000 on the mortgage, your $140,000 offer is not going to cover their needs.

Problems With The Home Inspection And Renegotiations

Sometimes a home inspection will turn up issues that you, and most likely the seller, was not aware of. Sometimes these issues need to be addressed and these can be used to help you in further negotiations on price.

The home inspection report will list everything that is need of repair or replacement in the home. While a majority of these are normal wear and tear items and may not be helpful in renegotiating the price your real estate agent will be able to help you determine if anything that turned up can help you try to negotiate a lower price, or possibly a credit toward the needed repairs.

While some things must be done by the seller depending on your loan type, your best course of action is to negotiate for a lower price or a seller credit towards repairs so that you know the work was done correctly and to your satisfaction. Not that sellers will have poor work done intentionally, but it is in their best interest to have the work done as cheaply as possible.

The seller doesn't have to agree to a price reduction or credit.  Even if you uncover a major issue with the home.  If that happens you have a choice to make, and you have two options.

  1. Continue with the purchase as previously agreed to.
  2. Walk Away from the deal, based on the uncovered defects in the home

Your real estate agent is working on your behalf and will handle the actual back and forth negotiations.  You chose your real estate agent wisly and can trust in the fact that they are working to ensure you have the best deal possible.

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