When you start house hunting, you should equip yourself with some negotiating tactics to help you get a good deal. You don't want to enter the housing market without some tricks of the trade for communicating with home sellers and their listing agents.
Use these six tips and the expertise of your real estate agent to ensure you get a great deal on your next home.
1. Negotiate based on the value of the home
Do your homework before bidding on a home. Just because the seller is asking X amount of money for the home doesn't mean it's priced right. Look at comparable homes in the area. Comparable homes will be in a similar condition to the one you're interested in — they will also most likely be in the same school district. You can have your Realtor generate a Comparative Market Analysis for you. Then, analyze the results. Are comparable homes going for less, more or the same? This will help you decide how to bid.
2. Get preapproved
You want to make sellers feel confident in accepting your offer. There is no better way to do that than to get preapproved for a mortgage from a lender. This way, when you find a house you want to bid on, you can show evidence that you have already been cleared for a mortgage loan. This offers less risk for the seller and will make them more apt to accept your bid.
3. Be flexible with timelines
A seller may choose to accept your offer over someone else's based purely on the fact that you are receptive to their closing timeline. The seller may need to delay the closing and the move-in or move-out date because they are still in the process of securing their next home. If you have a rigid timeline for when you need to move in, this may make it simply impossible for the seller to accept your offer, even if it's a good one.
4. Ask for an upgrade allowance
After the inspection has been conducted, you have some wiggle room to ask for certain repairs depending on the outcome of the inspection. If the inspection revealed some major issues with the house, you can request that the seller fix those issues or accept a lower purchase price for you to address them yourself. Your Realtor can help you determine how much allowance to ask for from the seller.
5. Write an offer letter
Since the housing market has gotten so competitive, submitting a letter with your offer can make a big difference. The letter should state your interest in buying the home and why it is the perfect fit for you and your family. If the seller gets to know you a little better and sees how much you've fallen in love with their home, this just might sway them to take your bid over someone else's.
6. 20 percent down, 3 percent earnest
To be a competitive buyer, you should stick to a couple of numbers. Try to put down no less than 20 percent of the purchase price. Back that up with a 3 percent earnest money deposit. The deposit is an act of goodwill and will demonstrate to the seller that you are a serious contender. That being said, your Realtor will know more about your finances, so you should rely on them for guidance.
Looking for more advice on the home buying process? Give us a call today — we're always here to help!
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