When buying a home, sellers you are purchasing from most likely expect you to negotiate the house price. To compensate for negotiations, most sellers will set the selling price higher than the market value. When purchasing a home, price negotiation can prove to be an intimidating task, especially if it is your first time. Still, with a little knowledge of what to expect, you can make the negotiation process less scary.
How to Make an Offer on a Home Property for Sale?
As a first time home buyer, you should know a few tips and tricks on determining your offer for a home purchase. They include:
Conduct your research and find out how much the seller bought the property on sale. It will give you an insight if you are purchasing in a slow or busy market.
Check the price of similar homes sold over the last few months to know how much you’ll offer. It is beneficial as it provides you with evidence to back your offer.
Determine what price you can afford to purchase the property. Take into consideration the deposit, maintenance costs, and mortgage costs.
Offer a fair price that is affordable to you.
Before making an offer on a given property, ensure that you estimate the amount needed to fully complete the property purchase, legal fees, among others. Make your written offer ‘subject to survey’ to allow room for renegotiation afterward.
Home Buying Negotiation Tips
Work with a Realtor or an Agent
At click of a button; you can get real estate listings sites. However, this shouldn’t stop you from hiring a realtor. An agent is a very vital asset in negotiating your desired home’s price. The agent will also help you decide on how much you need to offer for a given property.
Realtors are experts when it comes to your local housing markets. They know properties that have a high chance to grow in value, how the rates of interests change, and what to expect when paying property taxes. Real estate agents can separate their emotions from the property purchasing process. It means that they will effectively advocate on your behalf as they are not restrained by fear of losing the property. Besides, real estate agents can help you draft a complete and strong offer letter, with all the needed contingencies to protect yourself.
Know Your Market
One factor to consider before starting the negotiation process. The higher the amount of interest in a property, the less the room for negotiation you will have. On the occasion that the local market is cold, the more space you have to ask for a lower price, repairs, and concessions.
It is another critical area where your realtor can prove to be a precious asset. Your realtor can assess the local real estate market and communicate with the seller’s agent or the seller. Besides, it allows you to know if the seller is willing to negotiate and to what extent. When the seller wants to get out, especially if the property has been on the market for a long time, you might get yourself a bargain. However, if the home is has attracted many potential buyers, you will have no choice but to give the seller a higher offer.
Ensure Your Finances are in Order
It requires you to prove to the seller that you qualify to get a mortgage. A seller will likely give preference to a buyer who has proof of funding and forego one without. So, remember this before you begin your home hunt.
Before you hand over the offer letter to a seller, ensure that the lender can preapprove you to get a mortgage loan. This letter is vital as it boosts your seller’s confidence in you as it is proof that you will get approved to purchase the home.
Always remember to include a preapproval letter when submitting your offer to the seller.
Get the Property Inspected
Inspection results are a crucial factor and hold much weight when negotiating the property’s final selling price. Hire an inspector to evaluate the property before you purchase it for any problems relating to air conditioning and ventilation, foundation cracks, problems associated with the heating, among others.
The home inspector should submit a report on these issues associated with the property. If the property’s inspection exposes any deal breakers, you should ask the property’s seller for a concession. You may wish to ask the property seller to lower the property’s closing price, fix the problems, or offer you a closing costs’ credit. These inspection results may also help you cancel the property sale if they expose a significant problem, or if your offer included an inspection contingency.
Ensure you Do Your Communication Through Your Realtor
Ask your realtor to handle any communication between the seller and yourself. These realtors are experienced and will know how to correctly phrase any questions and requests you might have without jeopardizing your interests.
Ask for the Closing Costs
Closing costs that proceed to the lender in exchange for funding your loan. The most common forms of closing costs are inspection costs, credit check fees, and appraisal fees. Closing costs usually range between 3% – 6 % of the total loan value meaning that these extra fees can put a barrier between your home purchase and you.
Investigate Why the Seller is Moving
Knowing more about the seller can allow you to negotiate effectively. If the seller’s reason for moving is because they have purchased a new home, you may ask for a discount land on a better offer. You will likely not get any renovations or repairs before closing as the property’s seller may be in a hurry to vacate the home.
Request your realtor to do some digging on the seller. Investigate if the home’s seller prefers a longer or shorter closing process. If the seller wishes to locate a new area with a better school district or have a divorce, they will most likely be a bit eager to sell. It provides you with more room for negotiation, mainly where the property has been on sale for a while.