Everything Is Negotiable
In the United States, we’re not used to negotiating a
price for our every day purchases. But when you’re
buying a home, not negotiating the sellers’ asking
price may mean paying more than the home’s fair market
value. To avoid feeling that you paid too much, you
must learn the art of give and take for a successful
purchase price.
For example, you may find your dream house with an
asking price of $112,000. Your real estate agent tells
you that comparable homes in the area sold in the last
six months for $100,000 to $110,000, so you make an
offer of $100,000. Before formally presenting the
offer to the sellers, your real estate attorney or
agent prepares a contract, writing in the appropriate
contingencies, including the condition that all
appliances and light fixtures remain in the home.
Within a few days, you receive a counter-offer of
$110,000 with the seller’s contingency that you submit
a pre-approval letter from your lender. After a few
more rounds, the seller finally agrees to come down to
$105,000 if you move the closing day from four weeks
to six weeks to allow their kids to finish school.
Because you need to close in four weeks, you offer to
let the sellers rent the house from you for two weeks
after closing. The sellers accept. Finally, you have a
deal!
Remember, the goal is not to crush the seller by
getting everything your way. It is about getting your
dream house at a fair price. And negotiations always
involve a little compromise and give and take.
NEGOTIATING TIPS:
* Whoever made the most recent offer is legally bound
to that offer until it’s either withdrawn by that
party or the other party answers.
* Get it in writing! That includes all counter-offers
and contingencies to the purchase offer, initialed by
both parties. Your real estate attorney can make sure
all amendments are legal and clear to both sides.
* EVERYTHING IS NEGOTIABLE: From the price, to the
closing date, to the chandelier in the dining room.
* The bigger the gap between the asking price and the
offering price, the more time you should allow to
reach a mutually satisfactory price.
* Be aware of how long the home has been on the
market. If it’s been a few months, you might have a
slight edge when negotiating.
* Ask your attorney to include a contingency about
home inspection. A home inspection typically isn’t
done until after a purchase offer is made, so often
the negotiating phase begins without a thorough
picture of the home. Once you learn the home’s
physical problems, if any, you can ask the seller to
make the repairs or lower the price, or you may choose
to walk away if you think the problems are too
extensive, AS LONG AS your attorney has included a
contingency! If the contract says you must buy the
home at a particular price "as is" or with narrow
limitations, you don’t have much bargaining power.
* If you’re not the only buyer bidding on a home,
remember that the seller is looking for the best offer
in terms of price, terms (who’s paying for closing,
repairs, etc.), and contingencies. Too many conditions
and the seller may very well go with less-demanding
buyer.
* Pick your battles. Know ahead of time what’s really
non-negotiable to you, and be willing to compromise on
the lesser issues.
* Last, but not least, keep emotions out your
finances. If you can only afford to pay $150,000 for a
home, don’t go far above that number in a panic that
you might lose this house. Be willing to walk away.
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