As a seasoned real estate team with over three of experience, we’ve had the privilege of witnessing 1000s of property transactions. Most buyers know that the home’s price is negotiable, but many other aspects of the transaction often get overlooked. Here, we will share some insider tips on what you can negotiate when purchasing a home – some of these may surprise you!
The most apparent negotiable aspect of a home purchase is, of course, the price. If you believe the asking price is too steep, offering a lower price is always an option. However, in a seller’s market, where demand exceeds supply, sellers may be less inclined to budge on the price.
Closing costs are the administrative or escrow fees you pay when purchasing a home, and these can quickly amount to thousands of dollars. It may surprise you that these costs can also be negotiated. You can request the seller to contribute to or cover these costs entirely, potentially saving you a significant sum. Or you can simply ask the escrow company if costs are negotiable. Remember, you don’t get what you don’t ask for!
An appraisal is an unbiased professional opinion of a home’s value, often required by lenders to ensure the property’s worth matches the loan amount. Some buyers may not realize that they can shop around for a lender who may offer to cover this cost as an incentive to secure your business.
Loan Costs and Rates
One of the most substantial expenses of buying a home is the loan itself. While it might seem that mortgage rates and loan costs are set in stone, that’s not entirely true. These are areas where negotiation can save you thousands of dollars over the life of your loan.
When shopping for a mortgage, don’t just compare the interest rates. Look at the overall loan package, including fees, points, and closing costs. Some lenders may be willing to waive certain fees or reduce points to win your business.
Remember, while a lower interest rate can save you money over time, high upfront fees can negate these savings. Therefore, it’s crucial to understand the total cost of the loan, not just the monthly payment or interest rate. Don’t be afraid to negotiate these costs and rates with your potential lenders.
A home warranty is an insurance policy covering the cost of repairs to essential systems and appliances in your new home. This can be especially valuable when buying an older property where the likelihood of needing repairs is higher. Negotiating with the seller to pay for a home warranty can bring you peace of mind as you settle into your new home. 12-13 month policies are a pretty common request to ask the seller for in an Orange County real estate transaction.
The closing date is when you officially become the owner of your new home. If you have some flexibility on this, it could become a negotiation point. Sellers who are eager to close the deal quickly may be more willing to compromise on other aspects in return for a speedy closing.
A home inspection is a detailed assessment of the property’s condition. If major issues are revealed during this inspection, these can provide leverage for further negotiation. You could request the seller to take care of necessary repairs, reduce the home’s price to accommodate the cost of future repairs, or request the seller provides you a credit for the repairs to be applied to your closing costs.
Negotiation is a Dance
Remember, negotiation is a dance that requires both parties to move. While the goal is to get the best possible deal for yourself, the seller also aims to benefit. Being prepared to compromise can lead to a smoother transaction and a win-win outcome for everyone.
Additional Tips for Successful Negotiation
A mortgage pre-approval shows sellers you’re a serious buyer and financially capable of purchasing their home. This can put you in a stronger position during negotiations.
Research the Local Market
Understanding the local real estate market will help you determine what a fair price for the property might be. This knowledge will inform your negotiation strategy.
Be Prepared to Walk Away
Don’t let emotions tie you to a deal that isn’t right for you. If the seller’s terms don’t meet your expectations, remember that there are other homes out there.
Work with an Experienced Real Estate Agent
An agent well-versed in negotiations can guide you through the process, potentially saving you time, money, and stress. We at the Sackin-Stone team take negotiation so seriously, that we took the time to become accredited Certified Negotiation Experts (CNE).
In real estate, knowledge is power. Understanding what can be negotiated in a home purchase can give you a significant advantage and potentially save you a substantial amount of money. Happy house hunting!