Some Tips of Negotiating your Real Estate Purchases
Question: We are going to be buying a home this summer and have been getting advice from friends about how to make an intelligent offer on a property. We don’t want to look foolish, but on the other hand, we don’t want to pay more than we really have to. What’s the best way to negotiate?
Answer: The purchase of real estate is indeed a negotiated transaction and a little up-front education will help you when it comes time to make that offer.
Your offering price should be based on local market conditions and how well the house is priced. Find out how fast homes are selling and whether or not they are selling for close to the asking prices. It hot markets, well-priced homes sell for very close to the list price and in slower-paced markets the gap between the list and sales price may be considerably more.
Your Realtor can help by providing you with comparable sales information and by showing you comparable listings. I feel that the best way to understand value is to be familiar with similar properties that are currently on the market in the same price range. If you miss this important step and blindly make an uneducated offer, you could overpay for a property that is priced too high for the market.
Or, you could err in the other direction and make a ridiculously low offer and in doing so you might offend the sellers who then become tough negotiators. An even bigger risk in making an inappropriately low offer is that you could lose the house to another buyer who is better informed and who makes a more reasonable offer.
How much you can afford to pay for the house should also be taken into consideration. At the time you make an offer on a house, you should be prequalified for your loan. If you are not currently prequalified, talk to a lender before you make an offer to make sure that you can qualify for the financing you need to complete the purchase. Presenting your offer along with a letter of prequalification from your lender with definitely strengthen your position with the seller.
Additionally, find out what you can about the market history of the house, including how long it has been on the market, whether or not the current list price was the original list price and when the last price reduction was made. If the price was reduced some time ago and the house has still not sold, the sellers may be receptive to a lower offer.
For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442