You have finally found your dream home. You are now entering the most critical part of home buying-–the negotiations.
As a first-time home buyer, this is also the most perplexing and stressful time. You know that some people are expert negotiators. And, this may or may not be your forte. But you want to get the most for your money and not have to pay your top offering price.
Negotiating doesn’t have to be difficult if you keep these things in mind:
- Know what you want
- Stay within your financial means
- Work with, not against, the sellers
Negotiating is an art, not a science. In every negotiation, there are at least two sides and two different personalities. Adjust your negotiating techniques accordingly.
Here are some helpful negotiating tips for first-time homebuyers.
The #1 Rule – Be Prepared to Walk Away
The top rule in negotiating is you must be prepared to walk away.
Make sure you know the highest price you are willing to offer before you start negotiating. If you can’t get the house at your pre-determined highest price, walk away. It truly is as simple as that.
If you are hesitant about your top price when you negotiate, your ambivalence will come through to the sellers.
First-time negotiators may end up offering higher than their best offer. The best advice is, don’t do it! Your new budget will start off already stressed, and your enjoyment of your new home will suffer.
However, walking away doesn’t always mean the deal is over.
A Realtor, in New Jersey, was negotiating on a condominium for a client. She knew her client’s final offer was a fair price. However, the sellers didn’t want to accept the offer–they had unrealistic expectations and wouldn’t budge.
When the sellers didn’t accept the final offer, the buyer’s Realtor politely thanked them for listening, gathered her coat and belongings, and calmly walked out. She left the house and was partway down the front walk when the sellers’ Realtor ran out the front door to catch up with her. The sellers wanted to accept her offer after all! The contract was signed that day.
Walking away can be, but isn’t always, the end of a deal.
Start the Negotiations at a Reasonable Price
Many first-time buyers believe the best thing to do is to start off with a low offer; this will leave a lot of room for negotiations, they think. But this is a dangerous way to go. A low offer may completely turn off a seller.
Even in a buyer’s market, sellers don’t want to be insulted. They love their home and want to receive at least a fair price.
If homeowners feel insulted by an opening offer, they may develop an immediate dislike of the buyer and refuse to counteroffer or deal with the buyer at all. Sellers don’t want “greedy” or “insulting” buyers to move into their cherished home.
But this doesn’t mean you have to come up with you best offer right away–leave some negotiating room, but don’t make an obviously low offer.
Study the Comps
Most motivated sellers will respond favorably to a fair market price offer. While you do have to gauge what the house is worth to you monetarily, you will also need to know what comparable houses have sold for in the immediate neighborhood. You can be sure that the sellers know these statistics well and are basing their expectations on these comps.
Let the Sellers Know You Like Their Home
You catch more flies with honey than with vinegar. The same holds true with home buying.
First time buyers may feel the need to play it too cool. They may give the impression that they can take or leave a home. This, however, might turn off the seller to the point that they will not want to sell their house to you at any price.
Remember, when you are buying a home, you are buying something that the sellers have probably put their blood, sweat and tears into. Their home is an extension of themselves and their family.
You do much better when you compliment the sellers’ home and let them know how much you like it; how much you admire their gardens and choice of paint colors. (But they do not need to know that you LOVE, LOVE, LOVE it!) Then proceed firmly with your offer.
The sellers will know that you like their home, but that you are not going to let it cloud your good negotiating sense. They will feel good about selling their home to you. This will help negotiations go smoother, and start to set a good tone for the entire home-buying process.
Never Get Your Ego Involved
Buying a house is a business transaction. Both parties are vying for a leg up. Never take negotiations personally. Ego has probably killed more deals than anything else in real estate!
This Is No Time to Play Coy – Be Available
Once negotiations start, and an offer is made, you must be available to meet counteroffers or sign papers.
Some first-time negotiators think they should be aloof–not be so available to answer a counter. This is never a good thing to do. Delays in responding to counteroffers can leave an opening for another buyer to create a bidding war.
If you are difficult to find during the negotiating process, sellers may think you’re going to be difficult to work with through the entire house buying process. It may turn them off to the idea of working with you.
Plus, home sellers can be working with more than one offer at a time. If you’re not available to accept an offer, someone else may be, and you’ll miss your opportunity to accept or counter.
One Final Word on Negotiating
Negotiating is all about getting what you want. First-time buyers need not be at a disadvantage when it comes to negotiating on their home purchase. But if negotiating on a home sale is completely out of your comfort zone, work with a Realtor who will negotiate on your behalf.