How to Negotiate the Best Deal
Buyers are finally being able to take advantage of cooling trends in previously hot markets. Multiple offers
are no longer being thrown at sellers as soon as the For Sale sign hits the front yard.
Competition has dwindled in many areas as investors disappear and buyers take to the sidelines. Unless a
buyer thinks his local market is headed for a big downturn, this could be the pause that allows him to get
into the market with a few perks unheard of in recent years as a bonus.
So how do you know what shape your market is in? Economists believe that real estate is closely tied to
employment, so if you’re in an area of growing employment, don’t expect to see double-digit depreciation
anytime soon. In areas such as the Midwest, where auto manufacturing is king, prices have fallen sharply
and will likely continue until the industry rebounds.
Here are 10 things buyers need to know to negotiate the best deal in a market shifting to their favor:
- Human nature is the biggest problem for sellers and buyers to overcome in a changing market. Prices
stagnate or drop a few percentage points and it’s amazing how different buyers and sellers react. Sellers
still think their house is “special” and immune to the market. Buyers figure every seller is about to be
foreclosed on and make ridiculous low-ball offers. Smart buyers do their homework, know what size home
they need, how much they can afford and then search the market for what they want and negotiate fairly.
- When you make an offer, know the recent comparable sales; it’s the best bargaining tool. “See what’s
going on out there,’’ says Beverly Durham of ReMax Gold Coast Realty in Camarillo, Calif., where entry-level
single-family homes begin at $500,000. “Make an offer $10,000 to $15,000 under what the last one sold.
Even in this market, if you insult your seller, they won’t want to deal with you. Sellers know what the
last one sold for. You want them to at least look at your offer.”
- Find out as much as you can about the seller’s motivation -- retirement, job, divorce, wants to move
up but only if he gets the right price. Durham says if a buyer knows the seller’s motivation they can
negotiate a better deal or move on to the next property.
- Multiple Listing Service (MLS) properties usually state what the seller owes. If not, your
agent should be able to track down the figures. There’s a big difference in negotiating with an
owner who owes more than the house is worth and one who has a lot of built-up equity.
- “After 45 to 60 days the seller is usually absolutely sick of keeping their house spotless
and sick of people walking through,’’ said Durham. This is when a seller may be the most anxious
about selling their house as traffic to their house has likely fallen sharply.
- Unless you’re incredibly handy and have time and cash, go after houses that are as updated as
you can afford. This is easier to do in a stagnant or falling market and fixers aren’t usually
discounted enough to be worthwhile.
- In a tighter market, it’s not too much to ask the seller to add the closing costs to the price
of the house. It’s better to put 20 percent down and add the closing costs to the loan than put 15
percent down and pay the costs upfront.
- Items to ask for that shouldn’t offend sellers are paying for new kitchen appliances or washer
and dryer. Most sellers will be willing to do so to close the deal. Durham also says it’s OK to
ask sellers to pay up to the first year of homeowner association dues.
- Don’t request anything that requires quality workmanship. “Don’t ask them to paint,’’ Durham
said. “They won’t do it the way you want. They’ll do a lousy job.’’ Also, don’t get carried away
and ask for the entire store. Be reasonable.
- Make sure to look at the big picture. In changing markets you should be planning to stay for at
least five years, so don’t get caught up in a $2,000 price difference. Remember, the goal is to get
the house you want to live in for some time, not to impress friends with how you worked the previous