Factors to Consider When Negotiating a House Price
Buying a house is about mastering the art of give-and-take. Most homebuyers think that the asking price is the most significant negotiating point, but that’s not the only piece of the puzzle.
Analyzing your major negotiation points will give you the advantage of determining an offer that works in your favor and appeals to the seller as well.
We’ve compiled 4 solid negotiation points buyers can consider when making an offer.
Obviously, one of the most important factors is the listing price. We all know that the listing price for a home is the suggestion of what the seller wants from the sale of their home, which is often negotiable. But unfortunately, pricing is the point where most of the deals fall apart.
Why? Because it’s reasonable normal for sellers to consider that the deal will close in their favor. For the buyer, the goal is the exact opposite. When sellers finance their homes, they need to make a certain profit on the sale of their home. Any amount less than the said amount means that the seller will have to pay the balance out of their pocket at the time they sell their home.
For buyers, this increase in sales price can be considered a profit. Buyers can ask the sellers to distribute ‘the increase’ in the length of their mortgage greatly, thus lowering the financial burden on them. Given this, buyers have more control over the price. That being said, however the buyer chooses to step ahead in negotiations, it is a wise idea to have a good strategy.
Most sellers believe that the fewer contingencies buyer includes in an offer, the more enticing is the offer. This is because fewer contingencies indicate fewer chances of the deal falling apart.
To successfully close a deal, contingencies should be placed carefully in a way that’s agreed upon by both the seller and the buyer. If the parties can’t agree, both of them can dissolve the contract and go away. Precisely for this reason, the buyers’ willingness to be flexible with the contract’s contingencies gives them power over the sellers.
Whenever possible, the buyers should find a middle ground in contingencies. Instead of waiving them all of them, they should request to shorten the contingency period. Explain the importance of inspection to the seller, tell him that the inspection report is worth the home inspection cost. If they agree, all the buyers will have to do is complete the inspections in lesser time. A decrease in the contingency time frame also means a quicker close of escrow for sellers; therefore, it’s a win-win situation for everybody.
For a quality pre-purchase inspection, get in touch with a Kitchener home inspector.
The closing date typically falls within a one to three months time-frame after the contract is signed. Many factors can influence the closing schedule. For example, a high number of contingencies can lengthen the period, whereas buyers making the payment in cash can shorten it.
The closing schedule becomes a solid negotiation point when one of the parties is in haste. If the buyer doesn’t have a time constraint, it’s a wise idea to make the seller know about it. Some sellers are looking for a shorter closing schedule while some of them want a longer closing period if they are buying and selling a home at the same time.
The ability of the buyers to accommodate the sellers’ needs and time-frame can make the sellers more open to negotiations.
The closing cost is another very important factor that can be considered when negotiating a home’s price. It generally includes any fees that are incurred during the closing schedule. These costs are generally split into half and paid by both the parties; however, the buyer can make a strong negotiation here, and lead the deal in his favor.
If the seller agrees to make amendments according to the buyers, it can be a two-fold effect for the buyers – one, it decreases their immediate out of pocket costs; second, it reduces the financial burden on them as it decreases the amount that the buyers have to pay.