Negotiating Your Dream Home
Are you buying a home in Raleigh's competitive market? Here are ten negotiation strategies to help you secure the best deal possible on a house.
Negotiating a real estate purchase can feel overwhelming, especially in today's dynamic housing market. When making an offer on a home, you will want a Realtor to help you understand what type of negotiations are appropriate.
If you are buying a home in Raleigh, you may have the opportunity to negotiate things like appliances, blinds, and an upgrade allowance. It all depends on what real estate you buy and your unique situation.
There are plenty of different tactics and ways of negotiating. There are also other times to negotiate, whether the purchase price, closing costs, or repairs from the inspection report.
Whether you are the buyer or the seller, you want to stand your ground to negotiate a successful deal. However, keep in mind that all of the parties involved wish to close. Staying focused on the end game will help you get through this process.
Here are ten surprising tips to give you a significant edge when negotiating your next home purchase.
1. Don't Speak First
After making your initial offer, you can ignore the urge to fill the silence with additional commentary or justifications.
When you let the other party make the first offer, you immediately have the upper hand. You can see their starting point, which you can use to your advantage.
When you speak first after making an offer, you risk undermining your position by appearing anxious or uncertain. Real estate agents know that the first person to speak often loses negotiating leverage.
Make your offer clear and complete, then wait. If the seller's agent calls to discuss, let them talk first. Their initial response will give you valuable insight into how the seller feels about your offer.
2. Keep Negative Observations to Yourself
Buying and selling homes is an emotional process for both the buyers and the sellers. As a buyer, remember this home's sentimental value and the number of memories it includes.
Never mention flaws, needed repairs, or negative aspects of the property during negotiations. Pointing out problems puts sellers on the defensive and can strengthen their resolve to maintain their asking price.
If repairs are needed, address them through inspection contingencies rather than during initial negotiations. Save specific repair discussions after accepting your offer and completing your professional inspection.
3. Always Have a Plan
Plans don't always work out how we expect or want them to, and the thought of overpaying is a real fear for most buyers. Most of the time, we have to work to get things to go our way.
Even though you may have set up an excellent plan for negotiating with the other party, it is always smart to have a backup plan in case the process doesn't work out as you had envisioned. Having a backup plan reduces stress and keeps your mind at ease.
Identify and actively pursue alternative properties that genuinely interest you. Real alternatives give you authentic confidence and reduce desperation, which sellers and their agents can sense.
4. Prioritize Personal Connection
Handle important negotiations through phone calls or in-person meetings rather than text or email whenever possible.
Meeting face-to-face or virtually allows you to build trust and does not give the opposing side much time to rethink their offerings. When you meet in person, do your homework beforehand so you are prepared and not caught off guard.
Voice inflection, tone, and real-time conversation allow nuanced communication that builds rapport and trust. Written communication can be misinterpreted and lacks the human connection that often seals deals.
If sellers are present during showings, introduce yourself warmly and briefly share why you love their home. People prefer to sell to buyers they like and trust, sometimes even accepting lower offers from buyers they have connected with personally.
5. Get Creative With Closing Costs
Homebuyers typically pay the closing costs to transfer the title. However, they may ask the sellers for help. Usually, when a buyer does this, they pay a higher price for the home, and the seller helps with closing costs.
This is a clever negotiation tactic to satisfy the seller that you are willing to pay their asking price. You will also save some money when paying off the title insurance and home warranty.
Either party may pay the closing costs; this is agreed upon while negotiating. Origination fees, surveys, taxes, discount points, appraisal fees, etc., closing costs must be paid before the title can be transferred to the buyers.
Instead of asking for a $10,000 price reduction, offer the full asking price with $10,000 in closing cost assistance. This approach is effective when sellers want to reach a certain sale price, or when comparable sales support their asking price, but you need help with upfront costs.
6. Keep Emotions in Check
When investing in real estate, keep your emotions in check and avoid making decisions based on fear, excitement, or frustration.
Emotional decision-making leads to poor negotiation outcomes. Sellers and agents can sense desperation, excitement, or fear, and they'll adjust their strategy accordingly. Calm, logical negotiators consistently achieve better results.
Discuss your feelings with a trusted friend or family member before responding if you feel emotional about a negotiation. Set maximum prices and terms before you start negotiating, and stick to them regardless of how much you fall in love with a property.
7. Practice Direct, Clear Communication
Nothing is worse than someone beating around the bush. No one wants to be dragged along and kept out of the loop. Be straightforward about your needs, timeline, and limitations without being aggressive or demanding.
Some negotiations can feel like a tug of war, with offers constantly going back and forth, rejection after rejection. This can be very stressful and irritating to both parties.
Remember that being direct will help speed up the process. You may get to acceptance and close much faster.
If you need to close by a specific date, say so upfront. If you're pre-approved for a certain amount, be clear about your budget constraints.
If you're concerned about specific property issues, address them directly through appropriate channels. Direct communication often leads to creative solutions that benefit everyone.
8. Know When to Walk Away
Knowing when a deal is not good is an extremely important factor. Establish your maximum price and terms before you start negotiating, and be prepared to walk away if they are exceeded.
Having a clear walk-away point prevents you from making emotional decisions that you will regret later. Sellers often respect buyers with clear boundaries, and sometimes they will return with better offers after you've walked away.
Before making any offer, write down your maximum price, required terms, and deal-breakers. Share these with your agent so they can hold you accountable.
If negotiations exceed your limits, withdraw and move to your backup properties. Many successful buyers have had sellers come back with better terms after they've walked away.
9. Conduct Thorough Research
Researching the market and the area you are considering will help you better understand what you are looking for. You don't want to enter negotiations without knowing the surrounding area.
Understand recent comparable sales, market trends, and property-specific factors that affect value. Getting all the home and neighborhood information will give you more ammo when making an offer.
Researching on your own time is helpful, but hiring professionals to do inspections and appraisals for you is even better. Knowledge is power in negotiations. When you understand actual market value, you can make informed offers and respond confidently to counteroffers.
Know how long the property has been on the market and any price reductions. This knowledge will guide your negotiation strategy and give you confidence in your decisions.
10. Approach Repairs Strategically During Due Diligence
You may think you have found the perfect house, but it may not be that simple. Many homes have hidden flaws that are hard to catch. A buyer's agent is essential because they can find red flags when seeing a home and help you with many other things.
If a home needs many repairs, you should consider that when making an offer. You don't want to have to spend a fortune to repair a house after purchasing it. Focus repair negotiations on safety, structural, and significant system issues rather than cosmetic preferences.
Lenders often require certain repairs to be handled before they loan any money. This slows down the process, and the seller is usually stuck with having to repair any problems with the home.
Some sellers tend to take a speedier route by offering the buyer a credit when the home is sold so that the buyers can take care of the repairs themselves. With the credit they receive for the repair cost, they will save money on purchasing the house.
Methodology
Data was sourced from Quicken Loans and Georgetown University to determine the top ten tips for negotiating real estate.
FAQs
How much can you typically negotiate on a house?
Offering as much as 20% under the asking price can be reasonable if a home needs extensive repairs. The more repairs and remodeling are required, the lower the offer.
What are the four C's of negotiations?
The four C's of negotiation are common interest, conflicting interest, compromise, and criteria.
Is offering 10% below the asking price on a house okay?
If the home is in good condition but needs some small repairs or cosmetic work, it is acceptable to ask for 10% below the asking price.
Negotiating Real Estate - Final Thoughts
When buying real estate, be prepared to negotiate using many strategies. The best real estate agents are always the ones who can get creative about what matters to you most while ensuring your real estate goals are met.
Successful real estate negotiation isn't about being the toughest person in the room but about being strategic, prepared, and professional. These ten tips will help you confidently navigate negotiations while maintaining positive relationships with sellers and their representatives.
Every negotiation is unique, and market conditions can significantly impact strategy. Working with an experienced agent who understands local market dynamics and negotiation psychology is invaluable.
Are you ready to put these strategies to work? Contact the experts at Raleigh Realty to connect with an agent who will fight for your best interests during your home search.
