When it comes time to purchasing a home, the ability and willingness to negotiate is paramount for both the buyer and seller. In general, sellers ask for more than they are actually willing to accept and buyers offer less than they are willing to pay. The trick is to find the perfect balance so that you, as a buyer, feel good about the purchase price without leaving the seller feeling insulted.
Real estate is a business that either favors the buyer or seller, hence the terms buyer’s market and seller’s market. When negotiating a purchase price, it’s important to know which of the two you are in. As the buyer, you will have the best chance at a successful negotiation if you research the price of other comparable homes in the area before making an offer.
When you make an offer, the seller will see nothing more than a stack of papers with some numbers on it that represent the price you are willing to pay. If you really want the seller to take your offer to heart, give them reason as to why you want to purchase their home. You can do this by preparing a handwritten letter expressing your interest and the reasons you fell in love with their house. If you have a family, tell them about everyone who will be living in the home. Let them get to know you and allow them to picture the happiness that you can bring to their home. Believe it or not, some sellers actually look at the process like finding a good home for a lost puppy. They want quality people to buy their home, so do your best to show them that you are sincere.
Not all offers are accepted, so don’t be discouraged if your first offer isn't accepted. In some cases, the seller will make a counteroffer for your consideration. As the old saying goes, “never take the first offer?” The same concept applies to real estate, and almost every seller knows it. Your first offer is likely to be less than you are actually willing to pay, which leaves you some bargaining room.
There are a multitude of reasons why a seller may choose to reject an offer, including a feeling that the offer was just too low, the house is newly listed on the market or another offer may be higher than the one you prepared. In some cases, sellers may also reject an offer that includes owner financing or other requests that are impossible to adhere to. One example may be an offer that requires the house be available within a certain amount of time. Most contracts require that the seller move out within 30 days, but anything less would require negotiation.
Before you sign anything relating to a real estate transaction, make sure that you read over every detail of the agreement. If you have any questions, ask your REALTOR®. After all, real estate is their business and they are there to help you through every step.