Everything Is Negotiable
In the United States, we’re not used to negotiating a
price for our every day purchases. But when you’re
buying a home, not negotiating the sellers’ asking price
may mean paying more than the home’s fair market value.
To avoid feeling that you paid too much, you must learn
the art of give and take for a successful purchase
price.
For example, you may find your dream house with an
asking price of $112,000. Your real estate agent tells
you that comparable homes in the area sold in the last
six months for $100,000 to $110,000, so you make an
offer of $100,000. Before formally presenting the offer
to the sellers, your real estate attorney or agent
prepares a contract, writing in the appropriate
contingencies, including the condition that all
appliances and light fixtures remain in the home.
Within a few days, you receive a counter-offer of
$110,000 with the seller’s contingency that you submit a
pre-approval letter from your lender. After a few more
rounds, the seller finally agrees to come down to
$105,000 if you move the closing day from four weeks to
six weeks to allow their kids to finish school.
Because you need to close in four weeks, you offer to
let the sellers rent the house from you for two weeks
after closing. The sellers accept. Finally, you have a
deal!
Remember, the goal is not to crush the seller by
getting everything your way. It is about getting your
dream house at a fair price. And negotiations always
involve a little compromise and give and take.
NEGOTIATING TIPS: * Whoever made
the most recent offer is legally bound to that offer
until it’s either withdrawn by that party or the other
party answers.
* Get it in writing! That includes
all counter-offers and contingencies to the purchase
offer, initialed by both parties. Your real estate
attorney can make sure all amendments are legal and
clear to both sides.
* EVERYTHING IS NEGOTIABLE:
From the price, to the closing date, to the chandelier
in the dining room.
* The bigger the gap between the
asking price and the offering price, the more time you
should allow to reach a mutually satisfactory price.
* Be aware of how long the home has been on the
market. If it’s been a few months, you might have a
slight edge when negotiating.
* Ask your attorney to
include a contingency about home inspection. A home
inspection typically isn’t done until after a purchase
offer is made, so often the negotiating phase begins
without a thorough picture of the home. Once you learn
the home’s physical problems, if any, you can ask the
seller to make the repairs or lower the price, or you
may choose to walk away if you think the problems are
too extensive, AS LONG AS your attorney has included a
contingency! If the contract says you must buy the home
at a particular price "as is" or with narrow
limitations, you don’t have much bargaining power.
*
If you’re not the only buyer bidding on a home, remember
that the seller is looking for the best offer in terms
of price, terms (who’s paying for closing, repairs,
etc.), and contingencies. Too many conditions and the
seller may very well go with less-demanding buyer.
*
Pick your battles. Know ahead of time what’s really
non-negotiable to you, and be willing to compromise on
the lesser issues.
* Last, but not least, keep
emotions out your finances. If you can only afford to
pay $150,000 for a home, don’t go far above that number
in a panic that you might lose this house. Be willing to
walk
away.
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