6 Ways to #Fail at Negotiating Price
You’ve looked at enough houses to fill an entire season of House Hunters and finally picked one to buy. Now you’re ready to make an offer. As an agent, I’m here to guide you through this nail-biting phase of negotiating the price of the home, but ultimately, you call the shots. Let’s make sure you are ready to negotiate like a boss.
Fail #1: Thinking House Price is All That Matters
That house with a price point $15k below your budget? It may seem like a deal — until you add on the costs of maintenance and replacing the aging appliances.
Planning on repainting, remodeling, or landscaping, too? Suddenly the price looks a whole lot higher. To some, it’s worth the savings, but you need a thorough analysis.
When developing your offer, calculate in the costs that will go above and beyond a mortgage payment. Then you can negotiate with an eye on the total cost of owning the house, not just the sticker price.
On the flip side, the price may not be all that matters to the seller, either.
She may have to start a job on the other side of the country in a month and value a quick closing. Or she may be looking to rent from you for a bit after the sale until her next home is ready. Finding out the sellers needs and being accommodating is negotiation gold.
Fail #2: Refusing to Back Down on Small Repairs
Before you draw a line in the negotiation sand over, say, a deck with some rotten boards, ask yourself if it’s worth losing the house over a repair that would cost less than a thousand dollars.
Say the house price is $250,000, which makes that deck repair less than half of one percent of the cost of the house. There’s a lot of emotional energy at this point in the process, so give yourself a break rather than dickering over it.
A house negotiation is not about winning for the sake of winning. It’s about getting the house you want at a fair price on good terms.
Fail #3: Waiving Formalities Because You’re So in Love With the House
Don’t be so blinded by house love that you do something silly like skip some of the formalities of home buying, such as the home inspection or the appraisal, in an effort to close the deal.
Those steps, and others like a termite or septic inspection, are known as contingencies. They’re there to protect you from ending up with a giant money pit.
Imagine how quickly the house-honeymoon would end if you found out you have leaky pipes, or that the identical house across the street sold for way less?
Besides, if you’re taking out a mortgage, your lender won’t let you skip an appraisal because they don’t want to loan money on a house that isn’t worth the loan amount. So even if you want to make it easy for the seller, your lender may stop you.
There are other ways to sweeten your offer and get that house:
- Pay some of the seller’s closing costs.
- Offer a fast close.
If this is your first house, speed is an ace up your sleeve because you can move faster than someone who can’t buy a new house until they sell the old one (another type of contingency).
And remember, while there’s a lot of emotion tied up in choosing a house, it’s still a business deal.
Fail #4: Getting Hung Up on a Few Grand
You offered $198,000. The seller won’t budge from $200,000.
Before you walk away, consider this: Two grand is a lot of money, but in the house-buying world it’s not so much. At an interest rate of 4%, with 20% down on a 30-year mortgage, that additional $2,000 will add just $8 a month to your payment.
Fail #5: Folding Because the Inspection Turned Up Issues
A good home inspection is going to turn up something. Usually several somethings. That’s good. It means the inspector is doing their job. A day when a home passes inspection with no problems at all is the same day that pigs fly.
Plus, many things that turn up on an inspection are easily handled. You can ask the seller to do the repairs or knock some off the price so you can pay for repairs.
And while some problems may seem scary at first, like a roof leak or plumbing problem, they’re almost always fixable and negotiable.
A point that first time home buyers really need to understand, and that current homeowners can attest to — a house is man-made. Things will break and it will need maintenance or repairs at some point, it doesn’t mean you should run for the hills.
Fail #6: Offering Less Because the Decor is Hideous
The faux-Tiffany swag lamp and trippy orange-and-brown wallpaper make your eyes burn, I get it. So you’re planning on offering less — way less.
Before you do that, know the market. If it’s a seller’s market, your offer may be seen as an insult especially if the home’s in good shape. And just like that, you’ve lost your dream home.
When you’re ready to make that offer, look past the little stuff that you can easily change, and focus your negotiations on what matters, like the location and the bones of the house.
Furniture doesn’t typically come with a house, but buyers have a habit of looking an analyzing the furniture in the space as well. Do your best to be conscious about it and look past the décor.
It’s always important to work with an experienced agent you trust to avoid these common mistakes. The wrong assumptions and moves can easily burn a sale on your dream house.
Be smart, don’t #fail.Contact Me