How to Negotiate the Price on a House
How to Negotiate the Price on a Home
The Basics of Negotiation
First Offers Do Make a Difference
Should You Lowball?
A lowball offer, by definition, is one that is dramatically less than the seller’s asking price. Some sellers would consider anything 10 percent below what they listed the home at to be a “lowball”. Your real estate agent can let you know any general knowledge about the property, but be aware that a low offer may be considered offensive by the sellers. A lowball may be an option for you, but keep in mind that they may (and often do) backfire on the buyer, resulting in total rejection by the seller without any counter offer in return.
Potential Reasons for Rejection:
Keep in mind that though they are moving, this home is part of the seller’s life and family. They may be very insulted by a lowball offer.
The sellers may not think you have strong financial backing. If you can only offer less than the listing price, perhaps you do not qualify for more.
Their listing agent will probably advise against it: Remember, the listing agent’s job is to advise their clients to get them the most money, as well as sell the home in a reasonable amount of time. The agent also makes more when the home sells for more. A lowball offer is not good for the listing agent or the seller.
The sellers may have a mortgage to pay off and can’t even consider your offer: For example, if the sellers still owe $200,000 on the mortgage, your $140,000 offer is not going to cover their needs.
Negotiating after the home inspection
In some cases, the results of your home inspection may give you a little leverage with the seller for further price negotiations if there were undisclosed items that were discovered. The report from your inspector will list at least a few repairs or replacement items needed in the home. You and your real estate agent will then discuss if you should try to negotiate a lower price or credits toward the costs of the repairs. It is best to get a price reduction or credits and handle the repairs yourself to insure they are done according to your standards of quality. But asking for this price reduction does not mean the seller will agree. If they do not agree, you have two choices: continue with the purchase as previously agreed upon, or walk away from the deal on the grounds that you don’t accept the home’s repair issues.
If you have a real estate agent working on your behalf, the actual back and forth work of negotiations is being handled for you. If you choose your agent wisely, you can trust in the fact that you have an experienced processional working to get you the best deal possible.