Note: We receive a commission for purchases made through the links on this site. Our sponsors, however, do not influence our editorial content in any way.
Buying a new home is always an exciting and adventurous prospect. But sometimes the housing market is a seller’s market, which means home prices have risen or are rising. But that doesn’t mean you will always need to pay a higher price. There are several methods and tips you can use to learn how to negotiate a home price in your favor.
Consider some of the following tips and you’ll gain a better understanding of how to negotiate home price.
There may be times when you are worried about haggling over a home price. The current housing market after COVID-19 lockdowns is a perfect example. Instead of learning how to negotiate home price, buyers are actually offering much more than the seller’s asking price. But it’s important to realize that a home price can be negotiated even after an offer is accepted. More about that in a bit.
A housing market like the one we are seeing in 2021 demands the expertise of a savvy real estate agent. An agent with a good understanding of the market and of other important aspects related to home sales can help you navigate these troubling waters.
Even more beneficial, an experienced real estate agent can sometimes find homes for sale that aren’t listed yet, such as foreclosed homes. Or homes that for some reason haven’t caught a lot of attention yet. This can give you an edge in making an offer. The real estate agent can also offer more insight on how to negotiate home price and act as the go-between with the seller’s agent.
A lot of factors come into play when determining if you can successfully negotiate a lower price on a home. A key factor to look at is how motivated the seller is. If the home has been on the market a while, the seller might be more motivated to accept a lower offer. Likewise, if not many offers have been made. On the other hand, if they have declined a lot of offers, it could mean they aren’t really that motivated to sell. Or it could mean they are holding out for a higher offer.
Once again, the expertise of a real estate agent will be very beneficial here. Sometimes the agent will be privy to details about the seller or the listing that can help. For example, the seller may need to sell the home quickly due to a divorce or a lien on the home. An agent who knows these things can use this knowledge to help you negotiate a lower sales price. They can also help you avoid making a mistake in choosing a particular home.
Remember when it was mentioned above that you can negotiate a home price even after an offer was accepted? The inspection is one of the reasons why you can do this. During the due diligence period, you are allowed to get a home inspection done. After the home inspector evaluates the home and surrounding yard, he will provide you with a detailed report.
If the inspection revealed major issues with the home, you might have some options in seeking how to negotiate a home price. Some major problems an inspection might find include cracks in the foundation, a roof that needs replacing, or problems with the HVAC system. If these or similar issues are found, they can be quite expensive to repair. As a result, you can ask the seller to give you credit to offset the cost of the repairs. Or you can even ask the seller to lower the price of the home.
Closing costs are expensive. Sometimes, as an incentive to buyers, sellers will pay for some of the closing costs. While this doesn’t lower the sales price of the home, it does save you quite a bit of money. You should be aware of what your estimated closing costs will be before you enter into a final contract. If it seems like you might have difficulty paying the closing costs in addition to the down payment on the home, consider asking the seller to cover some of them. They might be inclined to do so in order to ensure the sale of the home.
Obviously, sellers will want to make as much profit as they can on the sale of their home. And so it stands to reason that they will accept the highest offer. However, sometimes a seller can be swayed to accept a lower offer if there is some personal sentiment attached. For example, if you know you can’t beat a higher offer but still desire the home, trying writing a personal letter explaining what the home means to you.
Maybe it reminds you of your family home when you were growing up. Or maybe you think it’s the perfect home to start your own family. Mention how much you like certain features or how much you’d be willing to take care of the home if it needs a bit of restoration. You never know if a little emotional attachment might be just what the seller needs to want to help you.
As a general rule of thumb, all negotiations should go through your agent. The agent will know how best to present your offer and any subsequent negotiations in your best interests. Contacting a seller directly isn’t just frowned upon — it could actually cause legal issues if terms are discussed that aren’t in the contract.
Lastly, don’t be afraid to walk away from a home if the seller refuses to lower the price. It can be too easy to make a higher offer if you really want the home, or even if you just want to beat other offers. But you may find yourself with buyer’s remorse afterward if you do. Consider carefully how much you really want a particular home, and how much you are willing to offer on it. Be realistic, and you’ll soon find the home of your dreams at the price you want.