They say everything is negotiable in real estate…but only if you know how to. The ability to negotiate prices is an important skill, and more so, when you are negotiating for a property. Who doesn’t want to save a few thousand dollars with a few persuasive words? But negotiation is not as easy as it seems. The seller at the other end will be prepared. Negotiation will be even more daunting if you get to face a real estate agent. It is better that you learn a few negotiation tips before you reach out to an agent for your next home purchase. I am sure it will save you a few, if not many, thousands of dollars on your home deal.
Know what you are negotiating for
What if you are negotiating for a property that has no scope for negotiation? Well, you are bound to fail. Negotiation is mostly possible in two cases. Firstly, when the property is overpriced. Secondly, when the supply is greater than the demand—classical economics. Once you know the home you are dealing with is negotiable, start doing your homework. Check how long the house has been on the listing, find the prices of the houses in the neighbourhood, and try to figure out if the seller wants to sell the house immediately. Once you have the data, you are in the driving seat.
Motivate the seller
Motivation can make a person do things he wasn’t even thinking of doing a second before. Give him/her hints that you are interested in it by telling him/her that you will buy it as soon as a deal is reached. It may also help if you can communicate without suspicion that you will pay 20% or more as a down payment.
What you pitch as a buyer can make or break your buying strategy. The general rule says that you should pitch a price of at least 10% lower than the price you want to pay for the home. It suddenly gives you leverage over the seller. This strategy also works amazingly well when you are dealing in a buyer’s market. This happens simply because there are more houses to sell than the number of potential buyers. Sellers don’t want to lose customers over price.
Do not prolong the bargain
It might seem appealing to extend the bargain to the limit and try to finalize at your offer price. But do not do that, unless you do not have the intention to buy a house. Because in such a case, you might actually lose the deal. Also, do not get carried away while negotiating and let your emotions interfere and finalize the deal if you find a slight hint of the final offer from the seller.
Poker face with an appeal
Nothing works better than a poker face while negotiating prices. Make sure your face emanates an air of confidence and displays an interest in the property. It’s an art. Before you enter a negotiation, you must know what terms you would like to push for and what terms are you willing to give up. Leave emotions at the door and if possible, give yourself a prep round. An emotional and apathetic demeanour can just win you the game easily.
For most of us, buying a house is the most complicated financial decision. We’ve got 7 straightforward tips for you, which will help you in making the decision:
Do a thorough inspection of the house
A house may look beautiful on the outside, but inside it can be mildew infested with water leaking in the basement. Thoroughly inspect the house before finalizing it. Get the help of a professional to investigate things like mildew, foundation, leakages, wiring, blockage, termite etc. Flush each toilet and check every faucet. Check all the switchboards and plugs. These little things that usually get ignored later turn into big problems.
Keep a close eye on the neighbourhood
You went home searching in the winter and zeroed-in on the most beautiful and peaceful house. But, in the summer it turned out to be disastrous your neighbourhood became a noisy nightmare, with horns blowing out in the middle of the night and mornings being spent shushing the next door teenagers blaring music. Most homebuyers realize it late that though they got their perfect home, the neighbourhood wasn’t for them. If you have found the home you want to buy, drive past it at all hours of the day. Regular commuting will make sure that you can deal with living there on a regular basis.
Search for services near you
While the neighbourhood is being inspected, find out how far the house is from basic services. Search for the nearest grocery store, and make sure to research the schools. Even if you don’t have kids, having schools around is important. Schools increase the resale value of a house. Having a good school around can increase your home’s value as much as 20%. Also, when you put your house on resale, it is most likely that the buyer will have kids.
A practical approach, not emotions should be driving your decision of buying the potential house. Remember, bigger isn’t always better when it comes to the house. If you are a first-time buyer, maintaining a big house won’t be easy. Plus, large houses only appeal to a selected audience. It will pose a problem when you will want to re-sell the house.
Explore mortgage options
Not everyone will buy a house with cash at the closing table. Most people need a mortgage for buying property. With the market flooding with different types of mortgage companies and services, it is up to you to select a mortgage that will suit your needs. Choose to keep the future in mind. Go for a fixed-rate mortgage if you plan to stick around for a long term and go for an ARM if you are buying a starter property. Do your comparisons and shop around. Visit different mortgage lenders as different types of mortgages offer different interest rates and terms.
Get your home loan pre-approved
As the rule of thumb goes - You only get the mortgage that you are approved for. Getting a pre-approval for a loan is important. It is easy to get pre-qualified but having a pre-approved mortgage isn’t easy for everyone. To get a loan pre-approval your financial information has to be checked by the lender. Based on that, the lender will let you know how much they will lend you. This will save you a lot of time and energy. You will get an estimate of the actual budget and won’t run around with houses you can’t afford.
Understand what you are signing for
Considering all the above points, you’ve finally found your dream house, and you're ready to make it yours. You have to make an offer, to begin with. Take into account several things before making and accepting the proposal. Make an offer based on how long the house has been on sale, and compare the asking price with that of nearby properties etc. Pay attention to the fine print of the proposal, make sure it is an offer includes both the price and terms. Don’t sign anything without reading or understanding it, learn if the contract has any hidden terms. Some cases have been observed where the terms demanded money in lieu of extra value from buyers.