Negotiating Tips for Homebuyers

So you’ve found the perfect house. It’s got all the room you want for your family and it only needs a little bit of work here and there. There’s just one problem—it’s 15 grand over your budget. Luckily, the bigger the purchase, the more negotiating room you usually have. Here are a few things to keep in mind when it comes to negotiating a lower price with the seller.

Get pre-approved.

Getting pre-approved by a mortgage lender shows sellers you're good for your offer, and since deals often fall apart because the buyer can't get financing, that counts for a lot. Make sure you look like as desirable a buyer as possible.

Use the inspection to your advantage.

A home inspection has the potential to be your biggest bargaining chip. If it turns out there is something wrong with the house, sellers are often much more willing to open a dialogue and make concessions. That being said, don’t count too much on the inspection. It could easily come back clean, or the problems could be bad enough that you think twice about buying in the first place.

Know if you're in a buyers' or a sellers' market.

In a buyers' market, where there are more homes available than there are buyers, you have the advantage. Since homes are more likely to sit on the market for a long time, you likely won't have a lot of competition. That means the sellers are more likely to accept a significantly lower offer, so if you want to low-ball, this is the time to do it. In a sellers' market, where the supply of for-sale homes is low, you will probably face a lot of competition for the property. In this case, your best strategy will be to work fast and prove to the sellers that you are the best buyer.

Don’t worry about going a little over your budget.

Provided you’re not paying cash and you can get approved for the amount, don’t spend too much time angsting about a few thousand dollars. With the fairly low interest rates available at the moment, paying a little bit more might actually end up costing you around $10 or $20 extra each month.

Pay attention to your realtor.

Your real estate agent is going to be invaluable when you get down to the nitty gritty of negotiation. Not only will he or she have experience with sellers to draw upon, but he or she will also know how the local market is doing and how that comes into play with the listed price.