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After years of putting up with seller's demands, buyers are now in a position to negotiate. The real estate market is softening and sellers no longer call all the shots.
Granted, some listings will still attract multiple offers. However, in most cases, buyers will be able to negotiate a home purchase rather than purchasing on the nonnegotiable terms dictated by the seller, as was often the case a year ago.
This is not to say that all buyers will be successful in their home purchase negotiations. Transitional markets, such as we are experiencing now, are tricky. Prices are in flux, the inventories of homes for sale is expanding, and sellers are sometimes the last to recognize that the market has changed.
Patience is an important element of negotiating a home purchase in today's market. Some sellers have unrealistic expectations about the current market value of their homes. Their list price may be based on comparable sales information. But, those sales may be out of date in terms of current market value, even though the sales occurred are only a few months ago.
Incredulous sellers may need to test the market before they'll be willing to negotiate at a realistic price level. Don't rush the negotiations if you make an offer on a listing that's over-priced for the market. Start by offering a price that's below the top price you're willing to pay. You and the seller may have to counteroffer back and forth several times before you reach a mutually acceptable price. If you start the negotiations with your best price and the seller doesn't accept it, the dialogue could stop there. Leave yourself some room to move up in price.
Some sellers will outright reject a low offer if it's presented soon after the listing hits the market. If you make a low offer that's rejected, let some time pass and then make another offer. With this approach, you risk losing the home to another buyer who's willing to pay more. But, it's better to lose out on an over-priced listing than pay more than you think a property's work in a soft market.
FIRST-TIME TIP:
Here are a few negotiation techniques that have worked effectively for buyers in the past. One approach, if the seller's price is too high, is to bid a low offer and then jump up in price. Let's say the house you want is listed for $330,000, and it has been on the market awhile. You think the house is worth $310,000. You might make an initial offer of $275,000. The seller is appalled, and counters back at $325,000. You might then counter back at $310,000-a significant improvement from your initial offer. There's a good chance the sellers will accept your offer.
Some buyers prefer to inch along with their negotiations. In the above example, rather than making a big jump up in price, the buyers might counter the seller's $325,000 price with $280,000. The seller reduced his price $5,000; the buyers mimics the seller by improving their price by $5,000.
The inch along approach requires a modicum of patience. If the negotiations bog down, and there's still room to improve your price, try splitting the difference. This strategy has an incredible rate of success because both parties feel that they've come out ahead.
THE CLOSING:
Let's say that after several rounds of countering, you're $15,000 apart. Add half of this amount ($7,500) to your last offer price. The seller reduces his price an equal amount, you meet each other half way and create a win-win situation that you both can feel good about.
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