You can admit it: Buying a home is a scary task. You’re about to make the biggest financial commitment of your life, and you want to make sure you don’t get taken for every penny you have. Just the thought of it can make you want to keep renting forever. But take a breath and take these tips to heart.
With just a little advice on getting the home price you want, you can walk into negotiations full of confidence, and hopefully walk out with the keys to your dream home.
1. Listen To Your Realtor
If this is your first home-buying rodeo, you really need to get a realtor. As long as you’re confident that your real estate agent has your best interest at heart, listen to their advice on what price to start at and how to proceed in your negotiations. They’ve done this before and have a better idea of how a seller will react. The ultimate decision is up to you, but take their advice into consideration as you figure out what you want to do.
2. Look At Other Prices Nearby
Your realtor can help you determine the appropriate value of the home you want to buy by looking at prices of similar homes in the neighborhood or you can find some on your own online. Knowing the prices nearby, and whether there are reasons those could be lower or higher than the one you’re looking at, can give you a good idea of a fair asking price or starting offer since prices vary by location.
Some experts compare looking for a home when you need to find one quickly to going grocery shopping when you’re hungry. You’re likely to jump at the first thing you see regardless of the price. Don’t wait to start house hunting until a month before your lease is up; you’ll make an impulse buy and your desperation will come across to the sellers, giving them the upper hand in negotiations. Get your financing in order and start your search at least several months before you need to leave. This will give you the cool, confident air you need to get a good deal.
Besides knowing what other homes are worth, you should also seriously consider other houses. Knowing that there are other options out there will keep you from seeming too desperate to get the first home you like, throwing the negotiating power into the seller’s corner. You’ll be more likely to stick firm to your budget, make offers you know you can afford, and walk away content, whether you get the house or not.
Of course you want to get a good deal, and part of negotiating is trying to get the seller to go as low as possible, but if your first offer is a total lowball offer, you may have just hurt your chances for getting the home. If there are other offers on the table, your offer will just be tossed in the garbage. If there aren’t, you’ll likely offend the sellers and they may stop negotiations with you. Your first offer might come in under the list price, but make sure it’s not unreasonably low.
If a seller is really pushing for a higher number, a smart move to satisfy you both is to agree to the price they want (if it’s doable for you) but ask them to pay the closing costs. Closing costs are the fees you pay in order to transfer ownership of the property and they can be pricy depending on where you live. By having the seller pay these, which are typically somewhere around 2-3% of the home price, you’ll have more cash for the down payment.
Buying a home is stressful and doesn’t always turn out the way the buyer hopes. Many people have to put in offers on several houses before they finally get one, so go into the process with an open mind. If the prices are too high for you, if a bidding war is making you uncomfortable, or if the seller is being unresponsive or acting suspicious, it’s time to walk away. You’ll find your perfect home, but it just may not be the first one you try for.