Purchasing a home is probably the biggest investment you’ll ever make. The more you can drop the asking price for that home, the lower your monthly mortgage payments will be. The trick is to make the lowest possible offer without going so low that you offend the seller and lose the home.
Negotiating a better sales price means finding out as much about the home and the neighborhood as you can and having that information at your fingertips. Here are four strategies you can use to get the best possible deal on your new home.
Research the Home’s Market Value
Sellers know that buyers will attempt to get a price lower than the asking price. For this reason, they often ask for more than the house is worth. Knowing the home’s fair market value puts you in a position to offer a reasonable price. There are two ways to determine market value. One is to look at the recent selling prices of comparable homes in the area. The other is to hire an appraiser who can determine the home’s current market value. The cost for an appraisal is about $300 — money well-spent considering it could save you thousands.
Research the Seller
The more you know about the seller and why the house is on the market, the stronger your hand will be. For example, sellers who have already bought a new home are probably cash-strapped and need to sell quickly. The same is true for sellers who’ve taken a job in a new location. Sellers who are highly motivated to close are more likely to accept a lower offer.
Find out How Long the House Has Been on the Market
Although there are regional and seasonal variations, in general, homes are listed for a couple of months before they sell. Sellers whose homes have been listed for significantly longer are more motivated to sell and more willing to accept a reduced price. Keep in mind homes that take a long time to sell might have problems, so have the home thoroughly inspected before you sign.
Work With an Experienced Broker
The difference between you and a real estate broker is that you’ll negotiate buying a home two or three times in your life, while they do it every day. Competent brokers can research the market and the sellers for you and effectively manage the negotiations. When thorny issues arise, they can serve as the troubleshooter to avoid any animosity between you and the seller.
The purchase of a home is a serious investment. Whether you use an agent or set out on your own, make sure you’re armed with all the information you need about the home and the seller before you begin negotiating.