How To Negotiate Like A Pro

When you're looking for a new home, finding the one that meets your personal and financial goals can be a challenge. Even if you find your dream home, negotiating a price with the seller may present obstacles that prevent you from moving forward. Motivated sellers may be less difficult to deal with during price negotiations, but they still have a bottom line. One tiny concession may translate to a big profit loss and a longer closing process that delays the move. Although most sellers expect buyers to negotiate, knowing the right negotiation skills can put you ahead of other interested buyers and move you into the home of your dreams.

1. Understand the Market

When a seller puts a home on the market, they have already researched current market conditions that impact home values, interest rates, and inventory. If you're a buyer, you should do the same. While a seller's market is characterized by low inventory, low mortgage rates, and high home prices, a buyer's market is characterized by more houses for sale than buyers. Knowing which market you're in will help with successful negotiations.

2. Get Your Finances in Order

Sellers want qualified buyers so they don't experience unnecessary loan problems that delay or cancel out a sale. Getting your finances in order and getting pre-approved by a lender can help significantly with price negotiations. This is especially important in a seller's market when a seller may receive multiple offers on a home with some offers exceeding the listing price. As a buyer, you must be prepared to compete and negotiate to close the sale.

3. Negotiate Closing Costs

During every real estate transaction, the seller and the buyer must deal with closing costs that impact the sale. By negotiating closing costs, both parties can benefit. Typically, each party is responsible for certain fees:

• Seller's Responsibility — Buyer's repair credits; Buyer's title insurance premium; Commission to the listing agent and buyer's agent; Loan payoff; Transfer taxes and recording fees; and Unpaid HOA dues or fees.
• Buyer's Responsibility — All fees and expenses for Appraisals; Credit reports; Home inspections; Loan applications; and Lender's title insurance and title search. 

When doing a final review, check with your realtor or real estate attorney to make sure all fees are in the correct columns of the seller's settlement statement.

4. Put Down a Sizable Deposit

After an offer is accepted and a purchase agreement is signed, the buyer must put down an earnest money deposit to show a commitment to move forward. The average deposit ranges from 1-3% of the purchase price, but a seller can demand more, especially in a seller's market. Putting down a sizable deposit is a good negotiation tactic that lets the seller know you're a serious buyer. It can motivate the seller to ignore other back-up offers on the table.

5. Work With a Qualified Realtor

Viewing hundreds of homes for sale doesn't make you an expert on local market trends and price negotiations. Licensed real estate professionals know how to guide you through the entire process of buying a home. Your realtor will act on your behalf by communicating and negotiating with the seller about important issues like home inspections, appraisals, closing costs, and items that remain on the property. Working with a qualified realtor can increase your chances of closing the sale.

If you're looking for a new home, negotiating with the seller can reduce your overall costs and close the deal. You may not be the only interested buyer, but you can be first in line!

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