7 Steps for Buying a Home: Negotiating the Home Buying Offer
Written by Matthew C. Keegan // November 28, 2007 // Home Buying // 4 Comments
You found the home you want and now comes the third step in the home buying process: negotiating the price you will pay for the home. Certainly, meeting the buyer’s asking price can take the edge off of the buying process but other factors will weigh in including market conditions. How you tackle this part of the home buying process could cost or save you thousands of dollars.
What Type Of Market Are You In?
What is going on in your local market? Is it a buyer’s market or a seller’s market? If you are in a buyer’s market you can offer less for the home than the seller’s price, but if you are in a seller’s market you may have to pay above the asking price especially if other parties are competing with you.
What’s In The Contract?
Your agent will provide you with a copy of the terms of the contract prior to you making your offer. You’ll want to acquaint yourself with all of the details to learn exactly what you are getting when purchasing the home.
Purchase price, terms of the sale, earnest monies required, financing contingencies, settlement and possession, a selling of your home contingency, home inspection, and termite inspection and environmental testings should all be noted. Your attorney will work on your behalf to make certain that your interests are protected.
Before Extending Your Offer
What are you getting with the home that you are buying? It should include all of the fixtures and just about everything that is nailed or bolted down. However, the refrigerator, washer/dryer, shed, outdoor furniture, window treatments and other items may be excluded, and could be pawns used in negotiating the final price.
Presenting Your Offer
Once you are satisfied that all of the previous steps have been accomplished, you can then present an offer based on the information on hand. You will present your offer to your real estate agent who will contact the seller’s agent. The seller’s agent will then contact the homeowner and present your offer to them.
The homeowner can respond to your offer in several different ways including:
- Accept your offer as is.
- Reject your offer outright.
- The seller could change the terms of the contract and present a counter-offer.
- You can then counter the counter-offer.
- The seller can entertain a second offer.
Once an agreeable purchase price has been reached then you are on your way to home ownership. Of course, one or more contingencies could kick in otherwise the acceptance of the contract makes it a legally binding document for both parties.
Negotiating a home purchase can be accomplished quickly provided that all of the contract conditions are worked out. Skilled real estate agents working closely with the buyer and seller can smooth out any rough patches and bring the negotiations to a successful and orderly conclusion.
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4 Comments on "7 Steps for Buying a Home: Negotiating the Home Buying Offer"
You can ask your real estate agent to be present when the offer is presented. Some times this gets you in front of the sellers and you get to know them on a personal level. It is not often done but can help get your offer accepted in a strong seller market
My husband and I are bidding on two homes. What is the average percentage (lower than the listed price) a buyer can present to the seller? On one deal, the seller is $10K higher than our present bid. Is it prudent to wait them out if we really want the property, and resubmit the same bid in a week or two? We see that 30 days seems to be the magic period before the seller gets a little “antsy”, and lowers the price. Our realtor is not an aggressive salesman. He is thorough and professional, but he seems to lake the skills to close the more challenging deals (ones where you really negotiate). Should we cut him loose, do we need a “closer” in order to drive home a active negotiation? We need some advice in this area.
Rita, there is no magic number or percentage to discount from the listing price. However, be prepared to either have your offer accepted, rejected, or countered.
If you have current comps, then you should have a strong idea what the property is worth. In my opinion, if the house is priced at or below market value, you offer should be within 2 or 3 percent points of that listing price. But be prepared to have your offer countered and from there decide if the price is right for you.
If the house is overpriced, then take that into consideration when you submit your bid. If you believe shaving off 10 percent or even more from the price is warranted then submit your bid accordingly. Again, they’ll either accept, reject, or counter your bid.
Yes, after 30 days a seller may be ready to drop his offer which would mean that you may find that a lower offer would be accepted.
As far as your real estate agent goes, I think you would do better to continue the relationship but state clearly that you need for him to move to a conclusion. The best agent is the one who realizes a deal is at hand and works toward getting all parties to agree on a price. If he is still lagging then by all means find someone who wants to make a deal.
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