How to Negotiate a Fair Price When You Purchase Your First Home
How to Get More Home for Your Green When You’re Green at Buying Homes
Going through the process of buying a home is always a very exciting time, but you have to be careful not to let your emotions run away with you during the process. If you do, you could end up leaving money on the table. So how can you negotiate a great deal when you’re in the market for your first home?
Know the Market
This point is crucial. To get an accurate sense of what a home is worth, you need to get to know the local market. Start by researching recent home sales in the area where you’re looking to buy. Granted, every home is different, but you should be able to find a few listings that are similar enough to give you a baseline of how much you should expect to pay for the home you’re considering purchasing. A real estate agent with a keen sense of the local market can be a big help in this regard.
Fine-Tune Your Finances and Get Pre-Approved
If you’re house hunting in a hot market like Portland, then you’ll need to be prepared to make a legitimate offer when you do actually find a suitable home. That means getting preapproved for financing before you start your search in earnest. Being preapproved allows you to strike when the moment is right, and makes you a more attractive buyer in a competitive housing market.
At Options Financial, we recommend the Pre Approve Me app to all of our clients. Created by a loan officer, this handy piece of technology streamlines communication between all parties in the home buying process, improving communication and accuracy between the client, realtor, and loan officer, while speeding up the closing process.
Don’t Sweat the Small Stuff
Some people would rather not negotiate, while others thrive on driving a hard bargain. Yes, getting a seller to drop the sale price or to make concessions feels like victory, but don’t get too caught up in winning for the sake of it. Let the little things like light fixtures, window treatments, and small differences in price go.
Be sure to keep your eyes on the bigger picture – is it really that big of a deal to pay $15 extra per month? In the grand scheme of things, it’s probably not. But being an excessively aggressive negotiator can cost you the opportunity to buy the home you want.
Get an Inspection
It’s always advisable to have your potential next home inspected, just to make sure you’re not purchasing a money pit. As an added bonus, the inspection might uncover issues that, while not deal-breakers, can be used as leverage in the negotiation process.
So you want a charming, fully renovated two-story home with a finished basement, a two-car garage, and a private back yard in a great neighborhood with excellent schools? And you want it for $250,000? Welcome to the club.
You’re free to be as firm on your criteria as you like, but the less flexible you are, the tougher a time you’ll have actually purchasing a suitable home. Will some desperate seller eventually accept your low-ball offer? Well, it could happen, at least in theory. But we wouldn’t hold our breath, especially in today’s competitive market.
Don’t Wear Your Heart on Your Sleeve
Okay, so you’ve found the perfect home and you’re head-over-heels. Well, don’t tell the seller! They’re likely to stand firm on the asking price if they know your heart’s set on moving in, and revealing your emotional attachment could weaken your position.
Unless you’re in competition with another buyer who has brought a similar offer to the table, in which case, it might be time to try…
The Personal Touch
Just because someone is selling a home doesn’t mean they have no emotional attachment to it. Most would prefer to know that the new owners would be making plenty of great new memories in the place that they used to call home.
In a competitive market, it may be a good idea to send a photo and a personal note. If the sellers decide you and your family are the people they’d like to see live in their old home, they might end up being more flexible on the price, or tip more in your favor if there are other buyers making offers on the property.
Go Forth and Conquer
Buying your first home feels great, but you certainly don’t want to pay more than you have to. We hope these tips help you get a great deal on your first home. Happy house hunting!