Are you planning to buy your first home soon? Then you should learn how to negotiate a house price to save money. Home prices have been rising steadily for the past few months. But with the right negotiation skills, you’ll get a good home at a lower price.
While buying a property in the buyer’s market can be a lot easier, you’ll need excellent negotiation skills to get better prices in the seller’s market. The good news is that many home sellers usually allow price negotiations. So, how do you negotiate like a pro?
Tips on How to Negotiate House Prices
In this guide, we’ll show you how to negotiate a house to get the best value out of your investment. Here are some of the tips to remember when stepping into the market.
1. Choose a House Priced Fairly
Even if you have top-notch negotiation skills, you need to find a reasonably priced house to ensure you get the most affordable deal. Research the local real estate market to find a home that falls within your budget. Make sure the house has all the features you need.
Once you’ve highlighted the features you are looking for, make an offer to the seller you identified. Thankfully, builders like Paradise Developments in the Durham Region price their houses fairly. You’ll not have to negotiate a lot when buying a home from such builders.
2. Review the Closing Costs
Many first-time homebuyers usually get caught off guard by closing costs. These are the additional expenses you will incur to complete a transaction, like an appraisal and home inspection fees. The good news is that the closing costs are negotiable.
The closing cost depends on the property’s value and location. However, expect to pay around 2-5 percent of the home’s purchase price. Either the buyer or the seller can pay the closing costs. So, you can easily convince the seller to pay part of the costs.
The homeowner can quickly pay part of or all the closing costs if you are in the buyer’s market. Conversely, the seller might not pay the costs if you’re in the seller’s market.
3. Ask for a Home Warranty
When shopping for a house, ask for a home warranty to cover repairs and inspection costs for a specific duration, let’s say one year. The warranty always covers repairing items such as plumbing systems, air and heating systems, and other appliances.
You can negotiate with the seller on who to pay the deductibles should there be repairs. But the most important thing is to add a home warranty in the final agreement. That will save you from spending a lot of money on expensive repairs after buying the house.
4. Include Contingencies Surrounding the Home
While a home warranty can save you the cost of repairs, a home inspection can help you negotiate for lower house prices. Hire a certified home inspector to assess every room before closing the deal. They can quickly identify all the flaws in the property’s design.
If the seller fails to meet some conditions, you can back out of the deal. If the inspector identifies some house issues, you can also negotiate further for a lower price. Note that the home seller may not accept all the contingencies you may want to include.
5. Choose a Favorable Closing Date
After landing on a closing date, you’ll probably start thinking about when to move into the new house. That will depend on your situation as you might be looking for movers or waiting for another home to close. Thankfully, you can negotiate flexibility on the closing dates.
For example, if you don’t intend to close until the lease is up, some sellers may be willing to lower the house price, so you complete the sales early. If the seller asks for more time to leave the property, you can agree, but in exchange for a lower home price.
6. Negotiate for Furnishings and Household Items
Nothing should prevent you from negotiating on the items you find attractive in a home you are buying. It can be the furniture that fits perfectly in the room layout and minor appliances. Some sellers may leave such items to make the home more appealing.
The chances are high that the seller will leave the household items behind if they no longer use or need them. You can furnish the house using the furniture, mostly when you’ve spent all your savings on the house. That will help you save money while recovering from the purchase.
7. Identify all the Updates
Check for all the maintenance and repair issues before closing a deal. You may want to refinish the floor, replace the old fixtures, or improve the tiles in the bathroom.
The good news is that you can always negotiate for such updates before moving into the house.
You can ask the seller to do all the updates before you seal the deal. Alternatively, you can do the repairs by yourself in exchange for lower house prices. If the repairs cost less than what the seller budgeted for, you’ll save a significant amount of money.
8. Consider Mortgage Loan Points and Home Prices
Sometimes you can negotiate for lower house prices based on external factors such as comparable properties and the overall market. You can also establish the negotiations on the appraisal results, house condition, and neighborhood status.
Another excellent strategy is to ask the seller to pay the loan points on your mortgage. The loan point is the fee paid directly to a lender at closing to reduce the mortgage’s interest rates. Each loan point you buy will lower the interest rate.
Knowing how to negotiate house prices is the most exciting part of investing in the real estate market. Ensure you perform local market research to get a house that fits your lifestyle at an affordable price.
If it’s your first time buying a home, work with a professional real estate agent who understands how to negotiate house prices.