Summary
This blog post offers reliable negotiating tips for both home sellers and home buyers to achieve their goals in buying or selling a home. Tips for home sellers include knowledge of the market conditions, understanding the buyer's needs, creating a win-win solution, and being prepared to walk away. For home buyers, the tips include getting pre-approved for a mortgage, making a strong offer, including an escalation clause, being flexible and respectful, understanding the seller's needs, and making an attractive offer that stands out. By following these tips, both home sellers and buyers can negotiate a successful deal.
Negotiating Tips for Home Buyers
As a home buyer, you want to buy your dream home at an affordable price and with favorable terms. However, you also need to be respectful and realistic, especially in a seller’s market where there are more buyers than homes for sale. Here are some negotiating tips for home buyers:
Get Pre-Approved for a Mortgage
One of the most important steps before making an offer is to get pre-approved for a mortgage loan. This shows the seller that you are serious, qualified, and ready to buy their home. It also gives you an advantage over other buyers who may not have their financing in order. A pre-approval letter can also help you determine your budget and how much you can afford to offer.
Make a Strong Offer
In a competitive market, you may not have many chances to negotiate with the seller. Therefore, it’s crucial to make a strong offer that stands out from other offers and catches the seller’s attention. A strong offer is not necessarily the highest offer; it’s the one that meets or exceeds the seller’s expectations and minimizes contingencies. For example, you can offer more earnest money deposit (EMD), waive some inspection or appraisal contingencies, shorten your closing time frame, or write a personal letter to the seller explaining why you love their home.
Include an Escalation Clause
An escalation clause is a great way to give yourself the best chance to win a multiple-offer situation. An escalation clause states that you are willing to pay a certain amount more than the highest written offer from another buyer, but not exceeding a maximum limit1. For example: “Bob Smith is willing to pay $1,000 more than your highest written offer but not to exceed $15,000.”
A copy of the highest written offer must be sent along with acceptance. This way, you can automatically outbid other offers without overpaying.
Be Flexible and Respectful
Negotiating is not only about price; it’s also about terms and conditions. As a buyer, you can show your flexibility and respect by accommodating some of the seller’s requests or preferences. For example, you can agree to close on their preferred date, let them rent back the property until they find a new place, or take care of some minor repairs yourself. These gestures can help build rapport and trust with the seller and make them more willing to work with you.
Conclusion
Negotiating a home purchase or sale can be challenging but rewarding if done right. By following these reliable negotiating tips for both home sellers and home buyers, you can increase your chances of getting what you want and closing a successful deal.