When purchasing a home, the sale price isn’t set in stone. There is a lot of negotiating involved to come to a conclusion that will appeal to both the seller and the buyer—especially in a competitive market.
Negotiating a home purchase price can be intimidating, especially for first-time buyers. Follow these five tips for negotiating a home’s sale price.
Get pre-approved for a home loanBefore you begin negotiations with a seller, you need to get pre-approved for a mortgage loan. Getting pre-approved for a home loan before you put an offer down will go a long way in helping you negotiate a home sale price. Sellers tend to be more open to price negotiations when they know the buyer is backed by a qualified lender. A pre-approval confirms to the seller the mortgage amount you are eligible for and that you’ll be approved for the loan.
It’s standard procedure to get a home inspected before you purchase it, but did you know it could potentially help you negotiate the sale price? After the house is inspected and repairs are needed, you can negotiate the price with the seller. Either the seller will be open to paying for repairs or lowering the home price.
How much you offer can depend entirely on the house’s condition and comparable sales. Your agent knows the housing market and will help you understand when negotiating is appropriate. They also know how to phrase questions and requests in a way that will be more receptive to the seller.
Closing costs are costs that are paid at closing and include fees incurred during the transaction. These fees are split between the buyer and seller and can be a point of negotiation. For example, the buyer might request seller concessions such as the seller covering transfer taxes or fees by subtracting that cost from the home’s sale price.
Remember that some loan programs may not allow seller concessions or have a limit.
If you and the seller cannot agree on price negotiation, it’s ok to walk away from the deal rather than throw your budget to the wind or feel pressured into buying a home. Adding a contingency clause to your purchase agreement can help protect you from liability in the event you have to walk away.
Remember, before adding a contingency clause to your contract, consult with your real estate agent. They will ensure that the clause is legal and easy to understand for all parties.
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