How Do I Negotiate A Home Seller's Asking Price Down?
Buying a home is an exciting time, but it can be a stressful one, too. There’s a lot to take care of first, like getting your credit report in order, because more than 40 million credit files contain errors, according to a 60 Minutes investigation. That certainly isn’t all, you should have a down payment; and, the bigger, the better, because that will lower your monthly mortgage obligation.
When it comes time to actually start looking after you’ve been pre-approved and pre-qualified for a home loan, know that the asking price is not the same as the selling price. Sellers, by definition, are homeowners and have an emotional attachment to their property. Many believe that the improvements they have made justify a higher asking price; that too, is a helpful bit of information.
What's more, if a homeowner has built-up substantial equity, they might be less than sure about selling and essentially starting all over. Though the proceeds will pay off their existing mortgage and the difference will likely be a source for a large down payment, it creates uncertainty. For a potential buyer, this can be a problem. Having an experienced real estate team will be the key to finding the right property and getting it at a good price.
Getting Prepared to Buy a Home
After getting your financing finalized, you should begin to prepare for the search, purchase offer, and contingencies. Start by defining your search area, which is to say your preferred neighborhoods. Be willing to widen your search area because you might find a pleasant, unexpected surprise. If you choose to stick to one specific area, you'll likely have to compromise here or there.
If the seller accepts your purchase offer, the offer becomes a contract, and you are on your way to owning the home. If the seller counters your offer, you may choose to counter his or her offer, or walk away. Note: If, for some reason, you forget to specify contingencies in your offer, there are sometimes legal steps you can take to back out of the deal. Ask your agent what recourse you have. --Credit.com
You should also have your earnest money ready to go because you want to be able to make that deposit as quickly as possible. In addition, find a reputable, licensed home inspector and pest inspector and ask if each could be available on short notice. That also goes for a moving service, so begin packing-up your things right away so you can act quickly, if necessary. The point is to get your proverbial ducks in order to be able to act quickly if the need arises.
How to Negotiate a Home Seller’s Asking Price Down
Once you find a home you like, then it’s time to do a bit of research before making an offer. There are too many buyers who rush into sending over a purchase offer because they don’t want to “lose” the home, but haste makes for mistakes. Here’s how to get a lower price:
- Find out why the owner is selling. Go into the negotiation knowing why the owner is selling the home. If it’s for a job relocation, that could mean you have time on your side to use as leverage. If that isn’t the case, find out if there have been previous offers. Should other offers have been made, that could mean the seller will be willing to accept a lower price.
- Have your buyer’s agent prepare a CMA. A real estate CMA or Comparative Market Analysis, is a document which compares like properties that have recently sold. Note the word “sold”, not those active on the market. This could reveal the home to be overpriced or even underpriced and you can act accordingly.
- Offer perks instead of money. A short closing date and letting the sellers take the washer and dryer with them are two examples of perks that Sellers should find interesting. Most sellers will welcome the change to close in less time, so they can be free to move into another home and avoid paying two mortgages for a month or more.
- Facilitate a speedier process. This is where having a pest inspector and home inspector ready to go will come in handy. Like a shorter closing date, you can offer to have these inspections done within a few days or a week, rather than two weeks or more.
Last but not least, if you can pay cash, that’s another great negotiation tool. The seller will be happy to get their money faster. Paying cash also means not having to pay for certain types expenses such as mortgage insurance, which protects the lender, not the borrower.