4 big considerations when negotiating a house price
Buying a house is all about understanding the art of give-and-take. Most buyers think that the main goal of negotiation when buying a house is the price, but the truth is that that’s one piece of the puzzle that you need to consider.
Learning the main negotiation point and the use of it will allow you to make an offer that works for you AND appeals to the seller.
We have here four solid negotiation points buyers can consider when writing an offer.
1. Offer price
Many buyers are conscious and sometimes agree that the selling price of a house is a hint of what the seller plans to do with the sale of his property. Unfortunately, the price can most of the time fall apart many deals.
Why? Well, buyers only want to get a deal when buying their houses. The goal is exactly the opposite of the seller. When selling your house, many sellers have to make a guaranteed profit if it was financed and not paid in full. Everything other than their balance means that they have to pay the difference out of your pocket when they sell your house.
On the other hand, on the buyer part, an increase in sales price over the duration of their mortgage can be distributed, which significantly reduces the financial burden on the sale. Because of this, buyers could have more price flexibility. It is, however, a good idea to have a strategic approach if you choose to try to negotiate the price.
The fewer contingencies a buyer includes in an offer, the more attractive the offer is for a seller. It is a common idea. Why? Few contingencies mean that the deal is less likely to go south.
Every contingency outlined in the contract shall be fulfilled in a manner agreed on both by the buyer and the seller for the successful conclusion of an agreement.
When an agreement is unable to be reached, the contract can be dissolved, and both parties can depart, and this concerns many sellers. The buyers have considerable room for negotiations if they are prepared to be flexible with their contingencies.
However, there are contingencies for one reason, which is to protect the buyers. If a house is assessed below the offer price, for example, waiving an appraisal contingency does not necessitate the seller having to negotiate the sale price with a buyer. Since lenders use assessments to determine the loan amount of a buyer, this could make the buyer pay a bigger down payment to offset the difference or force him to break the contract and forfeit his earnest money deposit.
It is best to consult your buying agent for contingencies to be removed to sweeten your offer.
Try to find the centerpiece when possible. You could, for example, offer to shorten the contingency period instead of waiving your control contingency altogether. Yes, this means that these inspections must be completed within a smaller window, but you still have to cover anything that is wrong. A decrease in emergency time also means that sellers can shut down their escrow faster. It’s a real victory.
3. Closing schedule
Usually, within the 30 to 90-day period of the contract, the closing date (or the ownership of a property changes hands) is signed, and the Parties enter into escrow. Factors such as large contingencies can prolong the closing timetable, and factors such as a buyer who makes a cash purchase can reduce the schedule.
When you want to move within a specific timeframe, the closing schedule becomes important. For example, you could have a definite new job start date or try to sell your old home simultaneously.
It is a good idea to make that known to the seller if a buyer has no pressing time constraints. Some sellers seek a longer closing time or a “rentback” if they simultaneously buy and sell a house.
The ability to flexibly comply with the seller’s time schedule could make it more open for the seller in other areas.
4. Closing costs
Closing costs include any transaction fees incurred. These fees are typically between 1%-2% of the total selling price and divided between the seller and the buyer. These fees are typically between 1%-2% of the total selling price and divided between the seller and the purchaser. However, the manner in which a buyer pays half of these costs can be another negotiating point.
As part of the contract, the buyer could apply for the seller, by withdrawing from its sales price (sometimes known seller concessions) to cover half of the closing costs or some transfer fees.
This has a dual impact on the buyer: it reduces the immediate costs of the buyer and the long-term financial burden by reducing the amount that the buyer must finance, thereby reducing its monthly payment. A good REALTOR® can aide you make the right offer for the property you’re interested in buying. For free valuation, contact us at 401-396-2888. We’re always glad to help!