7 Ways To Lose At Negotiating A House Price

Buying a home is a life-changing event. Where you live, the neighborhood, the attributes, and the amenities of the house can affect your family for years, impacting almost every element of life. Location may change your work-life balance by extending or shortening the daily commute. Your mix of friends and social activities will likely be related to where you buy a house.

Overpaying at the outset or having extensive repairs in subsequent years can also impact your future net worth if you cannot recover your investment when you sell.

In short, the home you choose impacts your quality of life.

Research First Before Buying

Researching the market is the best place to start. Knowing existing market prices, your borrowing limit and creditworthiness, neighborhood characteristics, and location-related issues will help you to develop a sense of what, where, and how much you may be able to afford.

Also, meet with prospective real estate agents to determine who makes you most comfortable and confident of success. Discuss the market. Is this a buyer's or a seller's market based on demand, availability, and interest rates? 

In recent years, the supply of available homes for sale has fallen compared to the number of active buyers. The rate of new home construction has not kept pace with rising demand. Interest rates have been at historic lows. The inevitable result? We currently have a seller's market.

A different set of negotiation strategies may be helpful in this instance.

What is "Losing?"

Losing a home purchase negotiation can take two forms:

• The first and most obvious would be paying more than you should have for the home, much to the delight of the seller.
• The second way to lose in negotiation is to see your perfect dream house go to another buyer because you were haggling over insubstantial amounts or issues.

Ways to Gain When Negotiating

Suppose you have searched and found a home that fits your criteria in the target price range. You decide to make an offer. 

Don't do the following:

1. Don't Appear Aggressive: An aggressive, demanding offer can end negotiations before they begin. Know that negotiation does not have to be adversarial and contentious. One great suggestion is to accompany your initial proposal with a polite letter, complimenting the owners on their beautiful home and how much you love the property. Set the stage for positive negotiations.
2. Not Knowing Why the Seller is Selling: Try to determine concrete reasons why the home is on the market. Is it related to proposed or pending activity in the area?
3. Not Studying the Market: How long has this house been on the market? Why? Know the immediate market and comparable sales. Offering according to this information will likely be more successful.
4. Do Not Forego Inspections: Professional inspections for house structure, mechanical elements, swimming pools, walkways, and driveways, and pests are essential.
5. Consider Not Demanding All Repairs Be Fixed at Seller's Expense: Some homes are offered "as-is." Some sellers agree to lower the price instead of repairing. If you otherwise love the home, a few-thousand-dollar compromise may mean only a few dollars a month in your mortgage.
6. Don't Quibble Over the Decor: Too often, because of paint or carpeting, buyers gag when entering a home that is otherwise near-perfect. Fixing the decor may not be a substantial cost. Personalizing the home is likely your goal anyway.
7. Don't Brag About What You Can "Really" Afford: Instead, kindly advise that any additional cost will be painful.

Avoiding these issues should encourage prospective homeowners to take a more thoughtful yet firm approach to home buying. Most importantly, listen to the advice of your real estate agent.

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