When buying a new home, you are often thrust into the uncomfortable role of the negotiator. Here, you are face to face with the seller who is competing with you for your hard-earned money. Things can get ugly, and things can get awkward.
You don't want to spend more than you should so you are determined to get the lowest price possible from your temporary adversary. What can to do to best negotiate a lower price for your new home?
Moving is stressful enough on its own but adding a negotiation process to the madness can lead to more madness. Here are 10 tricks and strategies to employ when trying to negotiate the price of a home:
1. Beware of your broker: Hiring a broker or agent is a logical choice when dealing with the complexities of real estate. They are professionals who should know a bit about the negotiation process and all the other aspects of the move. However, agents typically get a higher commission for a higher priced sale. That means that they have a serious conflict of interest when it comes to negotiating for the lowest price possible. It may be best to be present when the negotiation is going on and not leave everything to your broker.
2. Know your seller: This is where things start to get a little bit cut-throat. Any information that you can gather on why the seller is selling their home can be used as leverage. If the seller appears already moved out, you know that they are trying to leave quickly and are more likely to accept a lower offer. If the seller has already bought a new home, knowing this can give you an advantage and let you drive the price down. It may seem underhanded, but doing research on your seller and his possible motivations for the sale will give you an edge in negotiations.
3. Be mysterious: On the other hand, the seller can use your information against you. You never want to let the seller know just how much money you can afford to spend or how desperate you are to move into a new home. Knowledge is power, and you should give as little as possible to the seller.
4. Keep your options open: One piece of information you may want to subtly convey to the seller is that you have other options if you don't buy their home. This shouldn't just be a tactic, you really should have other possible homes you may want to consider if the current deal goes bad. You don't want to force yourself into a desperate situation where you have to make an offer that is way too high just because you need somewhere to live. Have a few backup plans and let the seller know that you are willing to walk if the price gets too steep.
5. Remain civil: Even if the negotiation can be simplified as a game of chicken with thousands of your dollars on the line, you shouldn't let things get too heated between you and the seller. If the seller starts to hate you, he is either going to refuse to sell you the house altogether or deliberately jack up the price just to spite you. Negotiate, but avoid personal attacks or overt displays of anger. If you can't do this, then maybe you should have a broker take care of the negotiations.
6. Research the area: This should go without saying, but it is always a good idea to get an idea of what similar homes in the same area have sold for. A little homework can give you a good idea of what a fair offer would be and what history the house has may inform your offer, as well.
7. Give a range for your offer: A small range is better than a single number for an offer. It shows that you are flexible, but it also forces additional negotiation. Your desired price should be in the lower end of the range you give, but by giving a range you know the seller can't immediately take it at the higher end but won't be offended by just getting the flat lower number that you would have led with if you gave an exact number.
8. Ask for more than a lower price: If the seller is stuck on a particular price, or if you have some concerns about the home, you could negotiate for the seller to make some repairs in the home or to help with the closing costs. The seller could be dead set on "winning" the negotiation and this compromise could make the seller cover more costs than he thinks and have you get more value than simply paying a little less on the deal.
9. Go face to face: All of these strategies are best employed in face to face settings. If you don't want to be face to face, then you don't really want to negotiate. Even if you are using an agent, they should be meeting the seller or the seller's agent in person.
10. Keep your ego in check: While I have been saying that negotiating is a competition and you and the sellers are adversaries, it is important to keep things in perspective. If you really need to buy a home, or you are in love with the house for sale, be sure to get what you want rather than focusing on "winning" the negotiation. Sometimes you may have to pay more than you think you should to get the best home for you.
Negotiating for a lower price on a home is like all other things in life: don't get so caught up in trying to "win" that it prevents you from obtaining what you really want.