In most real estate markets, there are far more homes for sale than there are buyers -- meaning buyers are in control. So, how can you make sure that you get the best deal possible?
1. Do your research about the home
Know as much about the home as you can before you put an offer on it. Think of it this way -- you wouldn't purchase a used car without knowing how many miles were on it, when was the last time the tires were replaced, and if the vehicle has undergone any major repairs or been involved in an accident in the past. So, why wouldn't you do the same amount of research for a home purchase? Determine if the asking price is too high by comparing it with the selling price of nearby homes within the neighborhood. Your realtor can do this through a comparative market analysis. Also, spend some time going over the seller disclosure document, which will tell you about any major upgrades or repairs that have been done to the house. Finally, get a home inspection from a licensed inspector that you trust. Make sure it's someone who is independent from both the seller and the lender, so that you won't get a biased opinion. If you don't know one, ask your real estate agent to recommend someone. The inspection will cost you some money, but could end up saving you a lot more if the inspector uncovers any problems!
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2. Do your research about the seller
The best way to know how low a seller is willing to go during price negotiations is to understand why they are selling the house. For example, if they already have a new home, this could be to your advantage. After all, they don't want to pay two mortgages at once, so they'll likely be more willing to negotiate with you in order to get rid of their old house. Or, if they've recently lost their job, been through a divorce, or experienced some other unforeseen personal situation, they may be more willing to negotiate than someone who is just looking to downsize. In other words, if they need to sell the home quickly, you might be able to negotiate with the seller a lower selling price. If they aren't in any rush, it's less likely they'll drop their asking price. Another way to determine if the seller will be willing to negotiate is by looking at the seller disclosure document. If, for example, the seller recently put a new roof on the home, and it cost them $20,000, they probably aren't going to negotiate much with you simply because they want a return on their investment.
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3. Be fair When it's finally time to start talking a dollar figure for the home, be fair to both yourself and the seller.
Obviously, you want to get the home for the lowest price possible. But the seller wants to get as much from the deal as they can, too. It's crucial that you don't lowball them on your first offer. If it's too low, the seller may be so offended that they don't even counteroffer. Instead, go lower than you hope to pay for the home, so that you have some wiggle room during the negotiation process, and always view it strictly as a business transaction. Try your hardest to leave emotion out of it, and don't take the negotiations personally. Also, it's fair to ask the seller to sweeten the pot with one negotiating point, like lowering the price, paying for needed repairs, or covering your closing costs, but don't overdue it. Asking for multiple negotiating points may be viewed as greedy by the seller. It's better to receive one of your requests, than to ask for too many, and not receive any of them.
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