Monday, March 8, 2010
Buying a new home can be a stressful time in any person’s life, and effectively negotiating a price you feel is fair and reasonable can make you want to pull your hair out. You don’t have to be a wizard of high finance or a poker faced deal broker though to get a good deal when you’re buying a new home though. Several key negotiating skills can put you in the driver’s seat when it comes to reaching an agreement with the seller and hopefully save you some money in the process.
Ensure you make the proper effort at due diligence when it comes to what, where, when, why, and how you are purchasing your home. When you know the market prices of your search area or areas, as well as the demographics, income levels, property tax rates, school systems, etc. you’ll have a better idea of where to begin your negotiations, how hard to push, what your bottom line should be, and when or if you are getting a good deal.
START LOW, BUT NOT TOO LOW
Unless the home is priced well under market value or the market is so hot your hand is forced, you should typically begin your negotiations below the asking price of a home. Sellers will likely factor this aspect of negotiating into their asking price and should be expecting a lower initial offer. Typically, 10-15 percent below asking price may be a good place to start (depending on market conditions). Starting lower than this is of course an option, but you don’t want to offend the seller, possibly creating a strained atmosphere in which he might be less likely to negotiate due to ill will or having taken offense to your initial offer.
DON’T SEEM DESPERATE
Even if you find your dream home or you’re on a tight timeline to purchase a house, you should try not to let on to the seller that this is the case. If the seller finds out you really want or need their home, it gives him the upper hand in negotiating. Make sure that if you are using a realtor that you let him or her know that you don’t want this information made public to the seller. While this negotiating technique might seem obvious, not every realtor out there is proficient in negotiating or even out for your best interest. Remember – realtors are paid largely on commission. That mean’s the higher the sales price, the larger their commission.
DON’T BE AFRAID TO ASK
As my mother always said, “It never hurts to ask. All they can say is no.” If your home inspector discovers unforeseen problems during the course of his inspection, asking the seller to take care of them as a condition of the home sale or to issue you a credit on the sales price can be a great negotiating technique. Use these things to your advantage. If you’ve seen furniture you like inside the home, consider asking the seller if they would be willing to leave it. They might not want to move it anyway and will be willing to sell it to you at a minimal price. An effective negotiator is rarely afraid to ask for something when it is to their advantage.
UTILIZE YOUR REALTOR
Use your realtor as your negotiating tool, that’s what he or she is paid to be. A realtor used as a buffer between you and the seller can allow you to employ negotiating techniques such as making counteroffers, issuing requests for information, stalling for time, and offering firm and final offers.