You’ve finally found the perfect home and submitted your offer. In a perfect world, the seller would accept it from the get-go, you’d close, and you’d live happily ever after in your new home. But, it’s not always that easy. When a seller submits a counter offer, the negotiations begin. Even with a great real estate agent by your side, the thought can be intimidating, but with the right agent and the right information, you can successfully negotiate the best deal and get the house.
How much you can negotiate on a house boils down to one main factor: the state of your local real estate market. Conditions in your housing market will ultimately determine whether your offer leads to a successful transaction where you close on a house, or whether you need to start looking for another property. An experienced REALTOR® will have a deep understanding of the local market and be able to negotiate the best deal for you; after all, it’s what we do every day. Hiring an agent to not only help you find a home but negotiate its purchase is the best way to help you find and close on your dream home, especially in a competitive market.
How much can you negotiate in a buyer’s market? In a buyer’s market, there are more homes for sale than homebuyers out there buying. This gives the buyer the upper-hand since there’s plenty of inventory to choose from, and sellers want to get their home sold. With a buyer’s market, sellers may make more concessions in contingencies, asking price, closing date and closing costs. Although a little haggling is fine, it’s still smart to avoid a lowball offer – it’s likely to insult the seller and have them decline the offer outright, and then there’s no chance of negotiations on other aspects of the purchase.
How much can you negotiate in a seller’s market? In a seller’s market, there are more buyers than inventory, and you won’t have much negotiating power. An unreasonable offer, or one loaded with contingencies, will likely result in a quick rejection from the seller. With plenty of other buyers out there vying for their home, your offer should be straightforward, easy to understand, and limited on contingencies and requests. Of course, you should never skimp on the important stuff like an appraisal, home inspection, or financing, but realize that you may be competing against other buyers who won’t ask for them. In this type of market, you need to be quick and decisive and ask for just the essentials. It is also highly recommended that you have a mortgage preapproval letter already in hand so that you’re ready, and the sellers knows you’re serious when you find the home you want.
What about negotiating in a balanced market? In a balanced market, there is a pretty even number of buyers and sellers resulting in a “balanced” supply and demand. The problem with this type of market is there’s no sense of urgency. Home sellers take their time weighing the pros and cons of offers, and several rounds of negotiations may be necessary; there is no need to push to finalize the transaction. If you’re ready to buy, however, don’t drag your feet for too long. There could be other buyers out there that are ready to make an offer with fewer contingencies and win the house.
If you have questions about the local market and whether it’s the best time for you to buy, please get in touch. I’d be happy to help you navigate today’s market and make the best decision for you and your family.