Sleepless nights, frustration, and stress—all are part of the process of buying a house and if you don’t know how to negotiate house price, you’ll soon be back on the market. It’s the toughest part of buying a house and just about everybody you talk to will tell you their negotiation process was a nightmare. That may be true, but remember, as you bite your nails and watch the phone, the reward of getting your home for a fair price more than makes up for the tough negotiation process. Here are a few tips on how to negotiate your house price as a new buyer:
- What's it worth? Have the home appraised by a licensed professional. Your realtor will usually recommend a licensed appraiser they’ve used in the past. That’s all well and good and an essential part of determining the fair market price for the house. However, if you feel the appraisal is off or the appraiser is not familiar with the home and the area, it is your prerogative to select another appraiser or get a second opinion.
- Do the comps. Your realtor will generally come into the negotiation chat with comparable square-foot prices within the area—“comps”—which give you an idea of where your dream house falls. If your house offers significant upgrades, remember to take these comps with a grain of salt. Your house could be worth more. Be careful to avoid “over-buying.” If your house’s price-per-square-foot is significantly more than the neighboring homes, you could have a hard time re-selling in the future.
- Remember the inspection. Just because you offer $150,000 on the house—and the offer is accepted—doesn’t mean you’re going to end up paying $150,000. If the inspection turns up a few surprises, such as the need for a new roof, you’ll be able to adjust your offer or require that the seller fix or repair the roof if your original offer stands. Negotiating the house price is a continual process until the final closing papers are signed.
- Everything's negotiable. The timing of the closing, that cool swing set in the yard—everything is negotiable! If it’s worth it to you to close in 60 days versus the more “standard” 30, offer a 60-day close. If you want to keep the pool equipment that you see stored in the garage or that fancy swing set in the backyard, be sure you write it in your offer. Unless an item is part of the building’s structure, it may not be included in the sale, so spell it out in your offer. It’s the cardinal rule in how to negotiate a house price: everything’s negotiable.
- Don’t take it personally. Rings a bit cliché, but it’s true. Of course, nobody wants to completely frustrate and annoy the other party in a home negotiation, but if the seller reacts to your lowball offer with barely a drop in their original price, don’t take it personally. People's perceptions of their house values are not usually objective. They equate years of hard work and “making a home” for themselves as increased value in the house and though it may not compare with the neighbors’ homes on a per-square-foot basis, it’s still a reality. Be careful not to take their counter-offer as a personal affront.
Buying (or selling) a house is one of the most stressful negotiations you’ll face, but it’s also one of the most rewarding! Keep in mind these rules of house price negotiation and you’ll come out of the process with your sanity intact.