Get what you want
TOP TIPS ON HOW TO NEGOTIATE LIKE A PRO
When buyers find a home they want but the price isn’t quite what they want it to be, what are the best ways to go about getting the best possible price? We spoke with some experts to learn their secrets.
Unless you’re talking about an all-cash transaction, the final price of your home will translate into a certain monthly mortgage payment. So keep that in mind as you talk about your payment.
“We always say, ‘You live in the payment not in the price,’ ” says Carrie Faletti, a real estate agent with Atlanta Fine Homes Sotheby’s International Realty. “Meaning the lender may approve you for a sales price that does not equate with what you are comfortable paying each month.” You can consult an online calculator to estimate your monthly payments based on a certain price. (Realtor.com and Zillow both provide popular options.)
“While Realtors aren’t mortgage professionals, they can provide general guidelines to their clients and direct them to reputable lending institutions, from which buyers can choose a lender to get preapproved,” says Bob Oppenheimer, 2017 president of New Jersey Realtors.
A good starting place for your negotiations is trying to determine the true value of a home. If you’ve ever purchased a car, you’re probably familiar with Kelley Blue Book values. While it’s harder to pin down the “fair market value” of real estate, there are ways to figure out what a home is really worth.
Every home has two values. There’s the market value — what the collective active buyers are willing to pay. Then there’s the value to the buyer. Buyers will be the one to set limits on when a home is no longer worth the price for them.
It’s conventional wisdom that sellers whose properties have been on the market a long time are open to negotiation, but our experts say that’s not always true. “Sometimes, it means that the seller is far too stuck on their price,” says Scott Troxel of Keller Williams Realty Nashville. “Sometimes it means they can only sell at that price because of loan balance.”
Most sellers will eventually understand they’ll need to negotiate if they want to sell their property. The time frame, however, is dependent on the local market. In a strong market, just a month can be enough to prove to a seller they aren’t priced realistically.
You can also negotiate the closing date. “It all depends upon who has the power in the transaction,” Troxel says. When there are competing offers, the seller controls the closing date. If it’s a buyer’s market, then the buyer has a stronger say in the closing date and it can be negotiated.
There’s also a convenience factor. “If a buyer wants to move in more quickly, this may force the seller to move twice — first into a rental, and then into their next property,” Oppenheimer says. Conversely, if the buyer needs to prolong the closing date, this may cause a seller to hold two mortgages simultaneously for some time.
“In either case, some of the seller’s extra cost may be something that is passed onto the buyer,” Oppenheimer says.
For first-time homebuyers that aren’t yet versed in the intricacies of all of the systems that make up a home, asking the seller to make repairs might give some peace of mind. But if you’re looking at a short closing period, scheduling a contractor to make those repairs can be difficult. Our experts cautioned against approaching this process as an opportunity to squeeze the price down further.
“I don’t recommend going into an agreement with the idea, ‘We’ll just work the seller down more in the inspection.’ I believe it’s important to act in good faith,” Troxel says. Trust is a vital part of the transaction — trust between the seller and buyer. “The more that trust is broken, the greater the breach of trust grows.”
“Repairs are best negotiated when the solution is black and white, say a faulty GFCI outlet or a broken garbage disposal, because the repairs are straightforward and we can easily test whether or not they’ve been properly addressed,” Faletti says.
Some things shouldn’t be negotiated. “Don’t compromise on your house wants and needs to buy a home with a bad floor plan or funky features,” Troxel says. After all, a bad floor plan means that you’ll have trouble selling the house yourself down the line. Bad floor plans can’t be undone without radical work, so don’t compromise there.
Other things like furnishings can be negotiated into the transaction. Oppenheimer has seen buyers ask for anything from patio furniture to a chandelier the seller was planning to keep, or even paintings. “You may find especially with older sellers, that they may not want to be burdened with removing furniture and will even lower the price for the buyer to keep it in the home,” Oppenheimer says.
Our experts also suggested buyers should be willing to negotiate above the list price. “Far too many first-time buyers walk away from a deal over $1,000 or $2,500, and don’t get the house they really want,” Troxel says. “Later on in the process, they realize how they were far too focused on winning the negotiation and being tight with the money.”
Faletti agrees. “All buyers and sellers should forget trying to ‘win’ and keep in mind that this is a negotiation, meaning that there must be give and take on both parties’ sides,” she says. If people are unwilling to compromise, deals never work.