How to Negotiate a Purchase Agreement with a Seller
As a first-time homebuyer, you are probably assuming that your real estate agent will negotiate the purchase agreement for you. While that may be true, or you might take a DIY approach selling by owner, make sure you don’t miss any opportunities to negotiate what you want, whether it’s covering closing costs, repainting the entire house, or extending the date of moving. After all, the worst a salesperson can say is no, and you won’t know until you ask.
All details of a real estate transaction are a negotiation. However, the type of negotiation you are going to engage in and the success you will have will depend on both the details of your particular purchase and the attitude/skill that you, your agent, the seller, and the listing agent have towards the negotiation process.
Research home sales before negotiating the purchase agreement
You should expect the seller to know how many comparable homes have been sold in the neighborhood and you should also be prepared with this information.
You can do this research on the Internet. Visit a website like Trulia to look up sales in your zip code. You can find out how much the house has sold for. Remember not to go too far back in time, as the market moves quickly. Just look at the sales for the last three months.
It can be difficult to define a “comparable” house because no two houses are the same. However, you must compare the square footage, the number of bedrooms and bathrooms, and the age.
Know what you can afford
You cannot negotiate effectively if you do not know the maximum amount you can pay. Before starting negotiations, you need to sit down and determine how much you can afford to spend on a new home.
Remember to calculate all your monthly expenditures. These can be credit card balances, car loans, and other obligations that cannot be negotiated.
Also, try to calculate travel expenses. The further away you are from work, the more you spend on gas and car maintenance. You must use one of the many mortgage calculators on the Internet to calculate how much you can afford to pay for a house.
Try to uncover the seller’s motivation
A successful negotiation will depend on the willingness of each party to negotiate. Consequently, you should try to determine how motivated the seller is to sell. If the seller is eager to sell, you can get the house for a lower price.
Try to ask innocent questions. You should say, “I don’t know why anyone would leave this neighborhood” and wait for the seller to tell you why they are planning to leave.
Another strategy is to ask bluntly if they are eager to sell and then gauge their reaction. Not everyone is a good actor and some people may communicate through a giggle that they are eager to sell.
Make a realistic first offer for the purchase agreement
You have to somehow prove to the seller that you are serious about buying a house. It means making a serious first offer. Don’t offer something ridiculously low that only insults the seller. As the basis for your offer, use your market research to establish a fair starting price for the property. Then subtract from this price anything that is functional that needs to be replaced or repaired.
Remember that “functional” does not mean “taste”. If you do not like the color of the carpet, you should not deduct the carpet replacement, as the color is an individual preference. However, if the mat is torn or stained with pet urine, it will need to be replaced.
A “functional” problem would be a refrigerator that is old and needs to be replaced. You can deduct approximately $ 2,000 from the price. When you submit your offer, you can include an addendum explaining your reasoning.
Hide your enthusiasm
If you seem overzealous, the seller will find out that they can try to corner you to increase the amount you pay. You want to appear professional and be driven by facts and data.
Keep the acceptance period short
If you make an offer, give the seller a short time to accept it: 24 hours or less. If you grant a longer period, you invite other competitive offers. You don’t want the seller’s agent to find someone else to make a competitive offer.
Request concessions to close on the purchase agreement
It can be difficult to get a seller to lower their price because they are emotionally invested in it. A seller who estimates his home is worth $ 250,000 might not want to go down to $ 240,000 to seal the deal. If so, be creative. You can try to sweeten the deal by asking for concessions that lower the total price you pay.
For example, ask for some home repairs to be done. Charging the seller for repairs will ultimately reduce the amount you have to spend on the home.
You can also ask the seller to cover some of the closing costs. It would also reduce the total amount you spend on the house.
Be prepared to walk
Before starting negotiations, you must have a starting point. This is the maximum amount you would be able to pay. To successfully negotiate the purchase contract, you must be prepared to let go if the seller does not accept or meet your starting point.
There are many houses on the market, even when the market is tight. It is very common to find a home a week later.
Negotiate everything before drafting the purchase agreement
A purchase agreement contains more than the purchase price and the down payment. You should also set a closing date that works for you. As a buyer, you can also negotiate the following aspect of the agreement:
- If the sale is subject to inspection.
- You want to understand the condition of the house and the surrounding land before making the sale. For this reason, you should probably make the sale conditional on an inspection.
- You can negotiate who should pay for the inspection.
Hire a lawyer to advise you
A qualified attorney can guide you through the purchase agreement signing and closing process. You do not need to hire an attorney to handle the negotiations for you. Instead, you can find an attorney who can advise you and who can review the purchase contract and the sales contract to make sure it protects your interests. To find a qualified attorney, contact your local or state bar association and request a referral.
3 Things buyers can always negotiate in the purchase agreement
Negotiating a home’s sale price is pretty typical, but there are still some hidden tips and tricks to make it work for you. According to real estate agent Chantay Bridges, you can request a lower price based on factors such as comparable properties, appraisal results, neighborhood condition, home condition, and the overall market, or you can ask the seller to pay some of the closing costs.
Cosmetic updates, furnishings, and household items
Realtors aren’t kidding when they say you can bargain for anything as a buyer, such as an item of furniture that fits perfectly into a room, lights, sinks and showers, cars, landscaping, kitchen and bathroom appliances, and even lawn care items.
Sellers often accept such requests because they want to make their home appear more appealing and renewed to the buyer. They also don’t want to take certain items along with them for change.
One of the top things you can successfully negotiate as a first-time buyer is closing costs. The total amount depends on where the property is sold and the value, but buyers can generally expect to pay between 2% and 5% of the purchase price. However, closing costs can be paid by the seller or the buyer. If you are in a buyer’s market and the seller is eager to leave the property, you may be able to ask the sellers to bear some or all of the closing costs.
This puts extra money in your pocket that you can use for major renovations, repairs, or upgrades, but you can also claim closing credit for specific changes made after the purchase agreement is signed.