5 negotiating tips every home buyer should know
They say that when it comes to real estate everything is negotiable. If you’ve ever bought a home, you know that's true. Whether you’re in the market to upgrade your current living space or you’re buying your first home, negotiation is a big part of buying a house. It’s important for home buyers to be open minded, keep their cool and stand their ground. After all, a home comes with a lot of responsibility...and a lot of debt.
Here are five negotiating tips every home buyer should know:
Do your research beforehand
Being educated is an important part of any negotiation. When you’re familiar with the real estate market and amenities in the neighbourhood, you have negotiating leverage. If you’re working with a real estate agent, ask them to research the purchase prices of homes recently sold in the area. Look at the listing price vs. the sale price, as well as the features of each home. That way you can compare your offer to similar properties and ensure you negotiate a good deal.
Understand the state of the market
Find out why the home is for sale
The reason for the sale is important because it lets buyers know how desperate the seller is. The more desperate to sell, the more negotiating power the buyer has. Sometimes people need to sell their home quick because they are being relocated for work, are going through a divorce or are having financial difficulties. As unfortunate as these matters are, if the seller needs to sell the home fast they will be more open to negotiating.
Don’t ever off full price
Credit.com says that buyers should never offer full asking price because the purchase price of real estate is always negotiable, even if the seller says they aren’t open to it. “It’s not often that a seller isn’t willing to negotiate. Barring any competing offers, this means you’re going to buy lower than the listing price. The average discount varies by market, but it’s often about 5% below the listing price.”
Factor in all costs before making an offer
The cost of a home is so much more than the purchase price. There is the cost of décor, upgrades, renovations, property taxes and home insurance. When making an offer, all additional costs need to be considered and factored in. If the home needs major renovations or small upgrades the cost can be negotiated to include the cost in the purchase price. On the other hand, sellers will sometimes make improves that increase the value of the home. Any recent upgrades that will save you money down the road are also worth noting.
Know your position, as well as the seller's
Home buyers should speak with a mortgage representative before starting to shop for a new home. This way you'll know how much financing you can afford and how much wiggle room you have when negotiating. This will help you avoid making offers you think are reasonable, but that you actually cannot afford.