Negotiation Tips for Buying a Home

Now that you have found the home of your dreams, it’s time to make an offer. Here are some negotiation tips that will help you successfully seal the deal.

Having worked with over 1000 buyers and sellers I have become an expert negotiator. I would recommend that you have a competent Realtor working for you to assist you with your offer. Since most people don’t buy a home very often, it’s a good idea to have an expert on your side.

Here are ten tips that will help you submit an offer the seller can’t refuse.

1. Present a strong offer to the seller. This doesn’t mean that you have to offer full price and everything else the seller wants, but it means to present a serious offer. If you really want the home, don’t lowball the seller and cause feelings of mistrust from the beginning.

A strong offer is one that contains a reasonable price, a good size deposit, and terms which are typical for that area of the country. Talk with your Realtor about local customs. This will help you know what the seller is expecting.

I have presented offers to the seller which required no counter offer whatsoever. The offer was strong enough for the seller to sign it as presented. Yet, it also gave the buyer what he wanted too.

2. Leave room for negotiating. It’s usually best not to make a take-it-or-leave-it type of offer. You are more likely to be successful if you leave yourself some room to negotiate.

Right now in our market homes are selling for 94% of the asking price. So a buyer might offer around 89% of the asking price. This would leave room to increase the price if necessary.

Your Realtor will be able to tell you the list-to-sale-price ratio for the neighborhood you are considering.

3. Present an uncluttered offer. First, be sure your offer is typewritten or at least written clearly and legibly. Make it easy to read and understand. Disputes often arise where there is ambiguity.

Don’t clutter the offer with a long list of contingencies all favoring you. The seller will think you are trying to take advantage and this will make for difficult negotiations. Also, use the type of contract that is widely used in your area.

4. Attach a loan pre-approval letter with your offer. Nowadays it’s fairly easily to get pre-approved for a mortgage. Ask your lender for a pre-approval letter and submit it with your offer.

I have been in situations where multiple offers have come in on one of my listings. The offers with pre-approval letters go to the head of the line every time. Seller’s will often accept a lower offer if it comes with a pre-approval letter.

If you can’t get pre-approved, at least ask your lender to prepare a pre-qualification letter. This means they have looked at your credit, reviewed your income and bills, and have pre-qualified you for the loan.

5. Attach a personal letter to your offer. This is rarely done but it can be a great tool. Tell the seller about your family and how much you love the home and hope they accept your offer. Tell them what you love about the home or the neighborhood. Try to personalize yourself to the seller.

The seller will love you for this and may even concede on some important points just because they like you.

This letter should be hand written. If you have kids, involve them in writing a letter of their own.

6. Don’t insult the seller or the seller’s agent. Don’t throw out such a low offer that the seller feels insulted. Don’t tell the seller all the things that are wrong with the home. Don’t tell the seller all the reasons you don’t like the home. This is a sure strategy for getting your offer rejected.

Also, don’t insult the seller’s agent. Don’t tell the agent he or she is stupid for pricing the home like they did. Don’t chastise them for whatever reason you might have.

On the contrary, do what you can to get the agent on your side. Butter them up if you have to. Stroke their ego. The seller’s agent has great influence and you’d be wise to try to use it.

7. Focus on the big numbers. I have seen a lot of negotiations fall apart as the buyer and seller argued over a number of minor issues. For example, instead of asking the seller pay for the $1,000 title insurance policy, why not offer to pay it yourself. Just mentally take $1,000 off your asking price.

I’ve seen buyers and sellers walk away from an offer over a $100 dollar issue. Be careful not to get emotionally involved in minor issues. Keep you attention on the big picture.

You don’t want to be in a situation where you win the argument but lose the house you wanted.

8. Find out what the seller wants and give it to them. Price isn’t always the most important thing. Perhaps the seller would prefer a delayed closing rather than a quick closing. Perhaps the seller would feel more comfortable with a larger deposit.

The important thing is to find out the seller’s wants and needs. Then try to accommodate them if you can. This is a winning strategy.

9. Negotiate in good faith. I often lead buyers and sellers to negotiate verbally and then put everything down in writing. It’s quicker and agreements are easier to reach. It’s important to negotiate in good faith. When it’s all put down in writing, be sure to keep your word.

Occasionally, I have seen one party try to change something when it came to putting it all in writing. The other party becomes incensed and a battle ensues.

10. Put everything in writing. Although I often negotiate verbally, the end result is that everything is put in writing. Most states require that sale and purchase agreements are in writing in order to be enforceable.

Without a written agreement each party is relying upon their memory of what was agreed. The problem is, not everyone remembers things the same.

The contract I use is now eight pages long. It covers just about everything you could think of. It’s a good contract because it leaves little to wonder about.

Negotiating is an art. It’s an art that can be learned. These ten tips can help you when you are buying your next dream home. Share them with your Realtor and employ them when writing your offer.

By: Dan Forbes