Negotiating the purchase price of a home

Buying a new home is a huge investment. For many people, it is the biggest investment they will ever make. Negotiating the purchase price of a home is not something that many people have experience with. It can be very stressful to try to make sure that the best price for a home is reached.

Before beginning the negotiating process it is important that the buyer has all the facts. Several pieces of information are not only important but necessary before you begin negotiating. Most important of all is the average price of homes selling in this neighborhood.

Prices in one part of town may be very different from prices in another part of town. Some neighborhoods are very popular and others, not so much. The market conditions will also determine where to start the negotiating process. In each market, it is important to know who has the advantage, the buyer of the seller. 

Conditions are different from one community to another and while prices may be falling in some markets, they are holding steady and even rising in others. How long is it taking the average home to sell in the neighborhood where you are looking to purchase a home? Are homes selling quickly, above asking price or are there a lot of homes for sale?

If a Realtor is handling the sale, they will be able to provide comparable sales prices for houses in the area. If there is no Realtor, then it falls to you to do the research yourself. The MLS (Multiple Listing Service) can be very helpful as can realtor.com

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Keep in mind that things have changed drastically in the real estate market and having a realtor will be a big advantage in negotiating the price of the house.

Many variables need to be considered when comparing prices; it isn’t just about square footage. Be sure to consider the age of the homes, the lot size and if there have been updates done. Things such as updated kitchens and bathroom can significantly affect the sales price of a house.

Is one house on a busy street, near the airport, abutting open land that may be developed? Be sure that the homes you are comparing are in the same neighborhood, it is often about location, location, location.

Once the comparable sales prices have been looked at, it is time to settle on a price that the house you want to purchase is worth in today's market. Having determined the home's real worth it is now time to determine a starting point for the negotiation. Keep in mind how much you want to spend as well.

Start lower than where you think you should end. Unless there are other buyers making offers at the same time as you, don't start at the asking price. If you want any concessions, keep that in mind when considering where to start the negotiations. Insulting the seller with an offer that is too low will not result in a positive experience.

Knowing what is non-negotiable is important. If you have no money for the closing costs, then you can ask that the seller contributes either the full or partial costs. A successful negotiation will go back and forth a few times until a figure is reached that both the seller and the buyer are happy with. Not all negotiations go well. Some sellers have not accepted the fact that their home is not worth what it was 4 years ago.

Sometimes it just isn’t going to be possible to reach an agreement. One great tip is to never become emotionally invested in a home until the negotiations are complete. It gives you a stronger position to have the attitude there will always be another house out there.

Negotiating the purchase of a house can be a nerve-wracking proposition. If you do your homework and know your real estate market, you stand a better chance to have a success result.