Every first-time home buyer hopes to get a house at the best price and terms. To achieve that, you need to know the areas to negotiate to get the best deal possible. When there are more homes for sale than buyers, there is more room for negotiation. Apart from the price, there are many things that you can negotiate for and save thousands of dollars.
When buying a home for the first time, focus on the following negotiating areas.
1.Offer Price
A house listing price is a suggestion of what the homeowner is hoping to make on the sale of their home. Sellers aim to make a profit. If the house was financed and they haven’t paid in full, an offer less than the balance is unacceptable. This will make them pay the balance out of pocket once their house is sold.
As a buyer, you want to score the best deal. The sale price of the house can be distributed extensively over the length of your mortgage. This can lower the financial burden of purchasing the home at the sale time. However, it would be best if you had a strategy to negotiate on the price.
Here are some hidden tips and tricks that you can use to make it work in your favor. You can propose a lesser amount based on;
- How Long the house has been listed on the market; – If it has been listed for a long time, most likely, there are few competing buyers. This allows you to negotiate on the price.
- Compare other Houses in the same Area; – Another way to find the best offer is by comparing the prices of recently sold houses in the same neighborhood. Look for homes of the same size, age, and condition.
- Appraisal Results; – The appraisal results allow you to estimate the best offer you can give the seller.
2.Closing Costs
Closing costs is one of the things you can negotiate fruitfully as a first-time homebuyer. Closing costs are all fees incurred during the transaction of purchasing a house. The fees can amount to 1-5% of the total sale, depending on a few factors. Closing costs can catch you off-guard as a first-time home buyer if you are not aware that you need extra cash to complete the transaction.
Homeowners in a buyers’ market are eager to move. You can strike a deal with them to pay half or all of the closing costs. This will lower the amount that comes out of your pocket, and you can redirect it towards other demanding areas.
3.Repairs
Repairs are the other significant areas you will find opportunities to negotiate and save thousands of dollars. You can ask for repair when making an offer if the home requires substantial repairs. Alternatively, the seller can lower the initial price to cover the cost of repairs.
4.Contingencies
Your offer will be more appealing to the seller if you include fewer contingencies. Contingencies exist to protect you as a buyer. For a deal to be closed effectively, all contingencies outlined must be fulfilled in a way that is agreed by you and the seller. You have room to negotiate by including or excluding the contingencies that you want.
Contingencies allow you to examine if a house is a good fit. It also gives you leverage if you want to negotiate for repairs. Consult with your real estate agent to know which contingencies you can opt to remove to make your offer more pleasing. You get a significant negotiating power if you are willing to be flexible with the contingencies.
5.Warranty
As a new home buyer, you should ask for a warranty on the home appliances and systems like heating systems, HVAC systems, and water heaters. Should these things the warranty would cover breakdown and need repair within the warranty time-frame, they typically get repaired with little or no cost to you.
6.Time Frame for Inspection
You can negotiate the actual time frame to do inspections. Offer a tight time frame if the seller wants to close quickly. This will sway the seller to accept your offer.
7.Appliances/Furnishings /Household Items
Typically, sellers state appliances included in the sale of their house. Before you make your offer, clarify what is covered and what is not. You can negotiate to have certain appliances or furniture included, and others removed. This will modify your offer price.
8.Closing Schedule
You should always focus on negotiating for the flexibility of the closing date and possessing dates to suit the seller’s schedule. This will make the homeowner more open to accommodate your request in other areas of transactions. Having many contingencies can increase the closing schedule time while purchasing the home in cash can shorten it.
For sellers who want a fast closure, offering a fast-close schedule can earn you bonus points. However, you need to be sure that the close time you are offering is enough to get through your contingencies, and your finances are worked out in that time frame, depending on your type of mortgage. Other sellers may be waiting to purchase a home or need more time before their next purchase closes. They, therefore, need a more extended closing period or a lease back. Adjusting to a seller’s schedule is a win.
Knowing your major negotiating areas gives you the lead to create an offer that works in your favor and still pleases the seller. Focus on these negotiating points to ensure you get the best deals and terms.
Disclaimer: This content does not necessarily represent the views of IWB.