STEP 19 – TO BUYING A HOME – 6 WAYS TO LOSE AT NEGOTIATING A HOUSE PRICE
Real estate negotiation tips so you can buy your dream home — and not overpay.
You’ve looked at enough houses to fill an entire season of House Hunters and finally picked one to buy. Now you’re ready to make an offer.
Your agent can help guide you through this nail-biting phase of negotiating a house price, but ultimately, you call the shots. Here’s how to negotiate like a boss.
Fail #1: Thinking House Price is All That Matters
That house with a price point $15k below your budget? It may seem like a deal — until you add on the costs of maintenance and replacing the aging appliances.
Planning on repainting, remodeling, or landscaping, too? Suddenly the price looks a whole lot higher.
When developing your offer, calculate in the costs that will go above and beyond a mortgage payment. Then you can negotiate with an eye on the total cost of owning the house, not just the sticker price.
On the flip side, the price may not be all that matters to the Seller, either.
She may have to start a job on the other side of the country in a month and value a quick closing. Or she may be looking to rent from you for a bit after the sale until her next home is ready. Sometimes being accommodating is negotiation gold.
Fail #2: Refusing to Back Down on Small Repairs
Before you draw a line in the negotiation sand over, say, a deck with some rotten boards, ask yourself if it’s worth losing the house over a repair that would cost less than three thousand dollars.
Say the house price is $800,000 which makes that deck repair less than half of one percent of the cost of the house. There’s a lot of emotional energy at this point in the process, so give yourself a break rather than dickering over it.
A house negotiation is not about winning for the sake of winning. It’s about getting the house you want at a fair price on good terms.
Fail #3: Waiving Formalities Because You’re So in Love With the House
Don’t be so blinded by house love that you do something silly like skip some of the formalities of home buying, such as the Home Inspection or the Appraisal, in an effort to close the deal.
Those steps, and others like a pest or septic inspection, are known as contingencies. They’re there to protect you from ending up with a six-figure money pit.
Imagine how quickly the house honeymoon would end if you found a mouse infestation or if the identical house across the street sold for much less.
There are other ways to sweeten your offer and get that house:
- Pay some of the Seller’s closing costs.
- Offer a fast close.
If this is your first house, speed is an ace up your sleeve because you can move faster than someone who can’t buy a new house until they sell the old one (another type of contingency).
And remember, while there’s a lot of emotion tied up in choosing a house, it’s still a business deal.
Fail #4: Getting Hung Up On a Few Grand
You offered $590,000. The Seller won’t budge from $600,000.
Before you walk away, consider this: Ten grand is a lot of money, but in the house-buying world it’s not so much. At an interest rate of 5%, with 20% down on a 30-year mortgage, that additional $10,000 will add just $60 a month to your payment.
If you can swing it — maybe you can cut a small thing out of your budget each month — it could be worth it.
Fail #5: Folding Because the Inspection Turned Up Issues
A good home inspection is going to turn up something. Usually a lot of somethings. That’s good. It means the inspector is doing their job. It’s nearly impossible for an inspection report to come back thinner than a textbook because it includes not only safety issues, but items to repair/replace, repair/maintain, minor defects, ongoing maintenance, things to evaluate, item to monitor during your occupancy, etc.
Plus, many things that turn up on an inspection are easily handled. You can ask the Seller to knock some off the price so you can pay for repairs.
And while some problems may seem scary at first, like a roof leak or plumbing problem, they’re almost always fixable and negotiable.
Fail #6: Offering Less Because the Decor is Hideous
The faux-Tiffany swag lamp and trippy orange-and-brown wallpaper make your eyes itch. So you’re planning on offering less — way less.
Before you do that, know the market. If it’s a Seller’s market, your offer may be seen as an insult especially if the home’s in good shape. And just like that, you’ve lost your dream home.
When you’re ready to make that offer, look past the little stuff that you can easily change, and focus your negotiations on what matters, like the location and the bones of the house.
Questions? Contact us at andi@andidyer(dot)com or 360-734-6479.
HOUSELOGIC helps consumers make smart, confident decisions about all aspects of home ownership. Made possible by REALTORS®, the site helps owners get the most value and enjoyment from their existing home and helps Buyers and Sellers make the best deal possible.
LEANNE POTTS
Leanne Potts is an Atlanta-based journalist and serial home remodeler. She’s tackled five fixer-uppers and is working on a sixth. She’s written about everything from forest fires to dog-friendly decor and spent a decade leading the digital staff of HGTV.
This content is not the product of the National Association of REALTORS®, and may not reflect NAR’s viewpoint or position on these topics and NAR does not verify the accuracy of the content.
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