Negotiating the Price of Your Home
Tips for Getting the Best Home Price in a Cold Real Estate Market
Aug 15, 2008
Negotiating the price of your home is the most daunting task in the house buying process. Fortunately, in a cold real estate market, the odds are in your favor. But how do you negotiate the best home price? Read on for helpful tips and tricks to buying the house of your dreams.
Finding the Right Real Estate Agent
Nolo's Essential Guide to Buying Your First Home (Nolo 2007) suggests hiring a licensed exclusive Buyer’s Agent instead of a traditional real estate agent. A real estate agent is legally obligated to get the seller the best price. An exclusive buyer’s agent works to negotiate the best home price for you.
Check out the Comparables
Your agent can tell you the purchase price of similar houses in your area. However, comparable does not mean the same. If a cold market continues, you may negotiate a significantly lower home price than houses from just a few months ago. Weigh your comparables by asking these questions:
- When was the house sold? The longer a house stays on the market the lower the purchase price.
- How similar are the houses? Compare square footage, renovations and even location.
- How long did it take to sell? A house comparable to yours may have sold for more if it sold quicker.
- What was the difference between the list price and the purchase price? Perhaps, houses in the area sold for an average of $5000 below asking price. This could help determine your starting offer.
Put Yourself in the Seller's Shoes
Jill and Herb Levitt of Lang Realty in Florida write, “It is not uncommon to lowball and to find that the sellers are accommodating to meet your needs.” Understanding the seller will help decide how aggressively to negotiate the best home price in a cold real estate market.
Here are some tips to identify an eager seller:
- The house has been vacated
- The seller is getting divorced, relocating for work or has passed away
- The price of the house has been reduced or is listed as "priced to sell"
- The house has been on the market for more than six months
- The seller recently had an offer fall through
Get Creative
Negotiating the house’s principle purchase price should be your first priority. But, the Nolo Guide writes that in a cold market everything is negotiable. You can save money on a house if you negotiate items other than the purchase price. Here are some common negotiating points:
- Closing costs
- Inspection fee
- Cost of repairs
Know When to Hold 'em and When to Fold 'em
A cold real estate market gives the buyer the upper hand to negotiate the best home price. Using these tips can help you navigate negotiations when housing prices fall. However, keep your expectations realistic.
The Levitts write, “Keep in mind that even though this market is a great time for buyers, you do not want to lose your dream home by being unrealistic. Your goal is to get your dream home at the best possible price.”
Negotiating the price of a home takes patience. Be prepared to make several counteroffers before a price is finally agreed upon. And don’t be afraid to walk away if you feel the seller is asking too much.
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