5 Negotiation Tips for Home Buyers
By Marcus Fleming, Purplebricks REALTOR® | April 5, 2019
In a recent report by U.S. News, author Devon Thorsby cited an increase in mortgage interest rates as a possible reason for the decrease in affordability of homes in 2019. When you think about it, this makes sense: The higher your interest rate, the more of your monthly payment that will be spoken for by interest payments. Such an increase (sometimes more than $100 / month) can eat into your ability to pay off your principal balance (the amount you actually owe for the home itself) thus, bringing down the base price of a home you’re able to afford.
It goes without saying (but we’re gonna say it anyway) that negotiating down the base price of your future home could put you in a better position when you go to make your monthly payment — especially if the interest on your loan is projected to be more than you … ahem, bargained for.
With that in mind, it pays to be an informed and confident negotiator when making an offer and receiving counter-offers.
Here are a few tips to make the process go as smoothly as possible:
On average, homeowners do not accept offers that come in more than 3 percent below the current list price. This is because the seller is likely paying up to 7 percent in sell-side commission and fees on top of the deal that is agreed upon.
Your [Written] Word is Your Bond
All negotiations need to be put in writing in order to be valid. Your agent can help you draft a written offer, either electronically (the most likely scenario) or on in paper form.
Beware of Negotiation Fatigue
Negotiations should not go more than 4 rounds. That's one original offer and 3 counter offers. After that point, the seller will start getting annoyed and become less willing to sell the home to you.
Mind the Ticking Clock
The longer negotiations drag out, the more likely someone else will step in with a stronger offer. Close the deal fast!
Make Sure Your Accepted Offer is Realistic
Once the home is under contract, there are no additional opportunities to renegotiate the price unless the home does not appraise.
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