A price certainly pays one of the biggest roles when buying a home. How much a homebuyer can afford is usually the factor that decides the course of the entire home buying process. Once they find a home they love, most homebuyers start thinking if they could negotiate the price down and wonder how much lower than asking can they go. Unfortunately, there is no magic number or percentage point that gives an answer, since selling a home is a very personal experience and it depends a lot on the seller's viewpoint, their position and emotional tie to the home. However, certain things can be done that will give you a strong basis for negotiation and here they are:
FIND COMMON GROUNDA sales transaction is a two-way street, and the seller's expectations are as important as yours. Make an effort to understand the seller's perspective and where they are coming from. Respecting the other's position is key to build trust. Every healthy price negotiation starts from there, so you have to look for an outcome that will make you both happy. The end result has to be satisfactory and acceptable to both parties. You don't want to overpay for a home, of course, but you also want to keep it fair, so make sure you know approximately how big the negotiation window is. The things listed below can help you with that.
GET BEHIND THE REASON FOR THE SALEWhen people decide to sell a home, it is usually for a reason. What's the seller's motivation? Why are they selling? It could be death, divorce, moving away, moving up, downsizing, etc. Such information can help you understand the seller's position. For example, if they are in a hurry to sell, it can benefit you and help you structure your offer, but again, coming from a place of respect and looking how you can accommodate their needs to make the transition easier for them goes a long way.
CHECK OUT THE FINANCIAL SITUATION OF THE HOME WITH THE HELP OF YOUR AGENTIt is in your best interest to find out about the property as much as you can, so have your agent do a small research, starting with the mortgage. What kind of loan does the seller have? A mortgage search will give you an insight into the specifics and if the seller has any financial issues with paying off the home. This is especially valuable information if you are in a buyer's market, as it probably will widen the negotiation window.
A title search should be conducted either way, but sometimes, it can advance your negotiating position as well. Have your agent conduct a title search for any irregularities. Looking for defaulted payments, loan modifications and similar, can help you negotiate your position better.
A HOME INSPECTIONA home inspection is probably the most powerful tool you can use to drive down the price. If it reveals any defects, dysfunctionalities or damage, it will immensely impact the sales price. It is proof in black and white and hard to dispute. Of course, if the inspection report is highly negative, you may want to rethink the home purchase.
Just like the title search, an inspection should never be skipped whether you decide to negotiate or not. You need to know the home you are investing in is safe and sound, and a home inspection is the most reliable way to assess a home's condition, especially the things not visible to the naked eye.
PROVIDE LOGICAL REASONING FOR YOUR OFFERJust as you are willing to understand the seller, make sure they also understand you. As said, it's a two-way street and you need to aim for a win-win. Don't be afraid to list the reasons why you think your below-asking offer is fair. The home may be outdated and you would like the money you are giving to cover for some updates, or maybe you think the location is lacking certain amenities. Make sure you do your homework and check all the factors that make up a home price, so you are able to give valid and logical reasons to seller’s the listing agent as part of your offer.
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