Negotiating The Home Price
The market is a key factor in negotiating a home's price. Negotiation strategy is influenced by the local market conditions. The landscape is like the weather. It's a patchwork of micro-climates. Markets can vary greatly from one city to the next and even from one neighborhood to another. Agents should be familiar with the area and be able to tell you which market they are in.
Negotiating In a Buyers Market
Bravo! You have the power to buy in a buyers' market. This means that there are more homes available than buyers who want to buy them. This is a difficult time for sellers, particularly motivated sellers who need to move. They won't let you go if you show an interest. They will likely offer you more concessions or price cuts than they are willing to make.
Ask for a moon. Offer a lower price than the final one. Ask the seller for closing costs and to set a closing date that suits you.
Do you like the appliances? Ask for them. Do you need the swing set for the children or the ping-pong table? Ask for it. They will most likely respond with a counteroffer.
Sellers may be offended by a "lowball" offer. They will likely reply with a simple "no" and then lower their asking price. The next buyer will benefit from your opening offer. A lowball offer might be worth it if you are ready to leave and go on your search. Sometimes, they work out. If you are truly ambivalent about the house, you should not be making an offer. You might find a better house.
Negotiating On A Sellers Market
This won't be an easy task. Sellers will have their choice of buyers, so you won't have much leverage. The seller will not negotiate if your offer is too low or complex. You want to offer a clear, uncomplicated offer in a seller's market. Keep to the basics: appraisal, financing, and inspection. You won't want to offer a lower price if the house isn't overpriced.
You also need to be fast. A good agent will encourage you to make a decision quickly if you see a property you like. On the other hand, a hot-market house can be sold if you're not pre-approved. Pre-approval letters can be valid for up to 90-days, so it is a smart idea to get pre-approved early on in your home search to ensure you can act quickly when you find the home of your dreams.
Be aware that you could be competing with buyers who offer a lower price or even more. To prevent others from buying your product for a paltry amount, consider including an "escalation" clause.
Negotiating In A Market That Is Balanced
A balanced market has enough buyers and enough houses, but not too many. Although this market may seem easier to negotiate in than buyer's and seller's markets, the counteroffer phase will take longer than usual. The market is less urgent, and neither party feels pressured to close the deal as quickly as possible. You can offer less than the asking price, and you can ask for any additional terms or properties. Be prepared to split the difference between you and the seller.
Be aware that even in a balanced market, you might get a better offer. You don't want negotiations to drag on forever. It's not worth losing a beautiful house because of a $5,000 difference in a $250,000 sale. You and the seller will get and give some things, but you should both be happy with the final contract.
It's likely that you won't be able to do it. A home is an expensive purchase, both financially and emotionally. Therefore, you should leave all face-to-face dealings to your agent and the agent of the seller. Refrain from calling the seller or their agent to ask questions.
Also, don't gush about the house if they are present, even if it is an agent or seller. Keep your enthusiasm low, regardless of who's there. It's not unusual for neighbors to be good scouts. If they see you taking a selfie in front of the house, the chances are that the seller will soon discover that you are passionate about it. Once the seller is aware, it's difficult to maintain an air of indifference.