How should you best approach negotiating for your potential new home?
A few things to consider:
Many potential home buyers search for the home of their dreams for weeks or months at a time. Once you have found that special home, you do not want to waste time haggling over a few thousand dollars. This purchase, unlike most in your life, should not come down to just the dollar amount listed on the multiple listing site. Many factors should be considered: budget, current market trends, price per square foot for comparable homes, upgrades performed, upgrades needed, are just a few things to consider.
A good Realtor will run the com-parables in the neighborhood or for the property you are looking at purchasing. Based on recent sales, current "for sales", and "pending" homes, we look at what the home --should-- sale for. This takes into account such things as condition, price, days on market, etc,. Usually we can come up with almost an exact price per square foot. Or overall price for the home you are interested in.
Knowing where these numbers come from, and what the market says the home should sell for, is a perfect place to start. Many people shop for a new car and compare prices of many dealers along with the trim level of the car. The same thing should happen for the purchase of a home. Knowing where to position yourself should help assure you that your offer will be accepted.
If your offer is too low, you risk offending the sellers, or at the least alienating them. This waste of time also allows other offers to come in, and potentially be accepted. If your offer is too high, later you may second guess your decision, and wonder if you should have continued shopping.
Ask your agent for these com parables. They should help position you to 'win the bid' for the home you are most interested in. The entire process is designed to be a win-win for both the buyer and seller. Not having the right information at your disposal does nothing but hinder the process.
Realtors are not assisting you to negotiate the deal. Our true purpose is to protect you in this, perhaps the largest purchase of your life. When we recommend a specific price, after researching the market, we are recommending this is in your best interests to get you to the goal of purchasing the home you want. We do want you to have the best price possible, but often, the market determines this price. It has nothing to do with the Realtor, or seller.
There are situations where sellers have their home priced over market value. It is our job to make you aware of that, and to advise you to place a lower offer in that situation. Usually, I will offer market comparable to the selling agent, to evidence our price within the offer. This is done to give them an accurate picture of where the price we are offering is coming from. Good Realtors recognize this, and typically already know that their client, the seller, is pushing for a higher price. Typically they have already advised their seller that the chances may be slim of receiving an overpriced offer.
In these situations, there are often extenuating circumstances driving that price. It could be that the seller is 'upside down' in their mortgage, owing more than the home is worth. There are many other reasons also. Sometimes I see sellers who are so sentimentally attached to their home, they may never sell. The price in their mind, and the actual market value are too far apart.
As an example: My husband and I bought a home 11 years ago. We went into the shopping process with a certain price in our mind. When we couldn't find anything we could both agree on, within our budget, we really became tired of the search process. One day, we happened upon a home that was not even within our search, it was also some 50k over our initial budget. We viewed it on a whim, so frustrated by all that we had seen that we didn't like. Immediately, and for the first time, we both fell in love with many aspects of the home. It was bright, airy, much larger than our previous viewings, and much newer. We both knew on the spot that this was "the one". When we entered negotiations, we knew already that we wanted this home. So the negotiations were very important. But searching for several more months would have cost us several thousands of dollars. So when the negotiation ended, we still felt that we had gotten what we wanted, and for a reasonable price.
Being realistic is important. Knowing the market information is important. All of these things combine to set you up for a positive experience.
Rene Guin Realtor