Negotiation strategies differ depending on how well the home is priced and who’s
on the other side. If you’re trying to buy a short-sale listing where the lender
has to agree to accept less than the amount owed, the seller doesn’t have much
say in the negotiations about price unless he can contribute money to pay down
the loan amount.
Regardless of who you’re dealing with, you’re more
likely to grab a seller’s or lender’s attention if you are preapproved for the
mortgage you’ll need and can provide verification of cash for the down payment
and closing costs.
Many buyers feel that cash is king. If buyers are
willing and able to pay all cash with no mortgage, no hassling with the lender
and no appraisal contingency, they feel they’re owed a price
concession.
Not all sellers agree. Some, who are confident in the value
of their home, would rather work with an offer from a well-qualified buyer who
needs to obtain a mortgage but who will pay a higher price.
Before you
start negotiating, you should understand as much as you can about the other
party. For instance, if the sellers are moving to a retirement home, they might
go for the highest-priced offer in a multiple-offer situation, even though it
might not be ideal in other regards. If they are liquidating their last asset,
every penny will count.
An all-cash or large-cash-down buyer might not be
able to negotiate a “deal” based on the fact that no lender will be involved.
But if the home is a good value and suits your long-term needs, you might
increase your offer price and include a mortgage. This way, you conserve cash
for other uses.
“Remember That Price is Not All That Matters In Buying a Home”
HOUSE HUNTING TIP: Many buyers don’t want to negotiate.
They want their first offer to be their best offer. Usually, the only time this
is effective is if yours is the only offer, the house is priced right for the
market, and you offer full price. In this market, you’re better off planning for
some negotiation, and not putting all your cards on the table at once.
In
most areas, the home-sale market still favors buyers. A lot of sellers are
selling for less than they paid. Some have to bring money to the closing.
Sellers who have owned for years are selling for less than they would have years
ago. It’s natural that they would want to try for the highest price
possible.
Negotiations are about more than price. Generally, the fewer
the contingencies or the cleaner the contract, the more attractive it will be to
the seller. Closing and possession dates can become issues at the bargaining
table. What’s included and excluded, time periods to satisfy contingencies, and
virtually everything in the contract is negotiable.
Since everything is
up for grabs, be clear about what’s not negotiable — for instance, you can’t go
over a certain price. Show flexibility in areas that will hopefully be valuable
to the sellers, such as buying “as is” regarding some needed
repairs.
Don’t waste your time with sellers who are firm at a price that
is considerably over market value. Wait until they become realistic while you
continue looking. Some sellers eventually get tired of having their home listed
and reduce the price to market value. Others don’t.
Sellers need to
understand that buyers in today’s market will walk away from a negotiation if
they feel they’re not getting anywhere or are being treated unfairly. Buyers
could become suspicious or disappear if they’re told by the sellers or their
agent that other buyers are lining up to make an offer when they
aren’t.
THE CLOSING: A smart strategy is to defend your position while
being honest and fair with the other party.
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