Few things bring out novice negotiators like purchasing a home. But approaching negotiations strategically can help you get the best possible deal. It makes sense then to learn how to harness these tactics to negotiate like a pro.
Know Your Budget Limit
Successful home negotiations start with understanding your budget and limits. This is according to the experts at Mortgage Maestro, based out of Denver, Colorado. This requires being pre-approved for a home loan from a lender. Preapproval letters state the maximum mortgage amount you qualify for along with estimated rates and monthly payments. Have your lender run the numbers at both your ideal payment and maximum affordability to establish guardrails before negotiating.
Understand the Market
Working with an experienced local real estate agent is invaluable when negotiating home purchases. They know recent neighborhood sales and listings, prevailing prices per square foot, typical concessions and other market nuances. If homes are sitting unsold for months, you have more leverage to negotiate. When supply is tight, you may need to compromise or risk losing out.
Price it Right
Overpricing is one of the biggest mistakes sellers make that keeps homes lingering on the market. Review comparable recent sales with your agent to determine fair market value pricing for any home you make an offer on. If the seller is overly ambitious with their list price, your agent can pull data to demonstrate where pricing aligns with demand. This evidence bolsters negotiating power.
Lead with Your Best Offer
In competitive markets, underbidding then gradually increasing offers can backfire and offend sellers. Instead, put your best foot forward with an initial offer at the top limit of your budget. Offer under list price but closer to fair market value. Include favorable terms like a large earnest money deposit and short feasibility study period. Show the seller this isn’t a lowball and you are serious.
Be a Problem Solver
Savvy negotiators look for ways to craft win-win solutions versus battling back-and-forth over a price. If the seller won’t come down enough, perhaps they can pay for a home warranty, closing costs or other concessions. Get creative proposing terms that provide value without compromising your must-haves or budget. Demonstrate flexibility on negotiable items too.
Don’t Take it Personally
Remember negotiations are just business transactions. View the seller as a potential partner, not an adversary you must defeat. Never get emotional or attached to a particular property or you lose objectivity. Maintain a friendly, calm demeanor and keep the bigger picture in focus throughout talks. Letting ego get involved destroys deals.
Trust Your Instincts
Occasionally negotiations hit an impasse over relatively small differences. If something feels off about the deal or you have cold feet, listen to your gut. Don’t get so invested in any one home that you ignore red flags. Be ready to walk away gracefully if reasonable compromises can’t be reached or your budget ceilings get exceeded. Other great options do exist.
Close on a Positive Note
Even deals that take hard work negotiating have win-win potential. Once you come to acceptable terms, close the transaction on a cooperative note. Thank the seller for working with you and convey excitement about the home. This smooths the way for finalizing all details efficiently. Discuss plans to keep in touch and help with their transition. With good faith, everyone can feel good about the deal.
To conclude, approach home negotiations as level-headed business propositions and you gain an advantage. Wield these tactics to secure your dream home at a price you feel good about.