As our aggressive seller’s market is balancing out, there are more and more instances where real estate agents can negotiate wins for their buyers in the transaction. Wins, including home warranty upgrades, closing costs, and a more flexible escrow timeline can be negotiated by your real estate agent on a case-by-case basis. Here are my 3 Tips to Get the Best Deal On a House.
1. Why are they selling?
There are a number of reasons people sell their homes and a seller’s reason, or motivation, as it’s known in the real estate industry, is powerful information in the hands of the buyer.
This information is hard to come by, but when it can be attained, it is invaluable in helping you get the best deal on a house.
If the homeowner is selling because of a divorce or job relocation, they may be in a bit of a hurry to sell. This is information we can use in structuring your offer (offering a quick close, for instance) to soften the blow of a slightly lower price.
A good real estate agent will always discuss with the seller’s agent what is important to the sellers before helping you write your offer. The goal is to help you get the best deal on a house, and not to offend the seller and get your offer rejected completely.
2. How long has the home been on the market?
Why is this information important?
Recently listed homes in good condition and presented well online are still in their “honeymoon” phase with buyers and agents — there is a lot of activity surrounding a new-to-the market home so the seller has very little motivation to accept a low offer.
As a home sits on the market with few offers, the seller may become more desperate to sell and, thus, more likely to entertain a lower sales price. In most cases, a home that is sitting on the market is usually one of the following:
A) Not positioned well online — This could be poor photography, for example, or a poor description of the home, that leads to few showings and fewer offers.
B) In inadequate condition — This could be a home that has deferred maintenance (buyers call this the “money pit”), or even a home that has not been professionally cleaned — it may have pet odor, or a “normal” level of grime that the seller is unaware of, but is a deterrent for buyers.
C) Overpriced — Some sellers will list their home on the high end, or even exceeding comparable sales in an effort to obtain the highest sales price possible. For homes that have enough custom features to justify the increase or homes that are listed in a seller’s market flooded with buyers, this can work. Otherwise, it does not, and sellers who do not react quickly to the lack of interest in the home by reducing the price, will need to be open to the few offers they do receive.
Keep in mind, the term “days on the market” is relative. In some markets, average days on the market is a year! In other markets, it is 5 days. A “market” is not only a geographic area — it is also a price point. In many markets in Southern California, first-time buyer hotspots like 2-bed and 3-bed townhouse communities will have a significantly lower Average Days on the Market than higher price point single family homes. Your agent needs to know the niche market of the home when advising you of your offer price and terms.
If the home you have your eye on has been listed for significantly longer than the average for the market, you may be dealing with a motivated seller, putting you in a stronger negotiating position that will help you get the best deal on a house.
3. Get help with your closing costs
Getting the best deal on a house doesn’t always mean getting the home for a discounted price. The fact of the matter is that the vast majority of homes sell at fair market value. If you are not willing to pay fair market value for the home you want, move over — because someone else will. Your goal as a buyer is to know what fair market value is, based on the comparable sales in the area that your real estate agent provides you with. This will guide you and help you make an informed and competitive offer.
In some cases, however, you may be able to negotiate for the seller to pay a portion of your closing costs.
Some sellers will balk at the idea of paying the buyer’s closing costs. A reasonable seller with no other offers on the table may agree to pay them, but may ask to raise the sales price of the home in exchange to absorb the closing costs. So long as this does not cause an appraisal issue, this is really a win-win for both parties, as it decreases your cash out of pocket as the buyer and has no negative effect on the seller. Definitely worth discussing with your agent to see if this will help you get the best deal on a house.
The danger in the latter scenario is that the new price may exceed market value and not meet the bank’s appraisal amount. You’ll want to discuss this option in-depth with your real estate agent, as this option is great in certain situations and certain death in others.
Hope you found this blog helpful! For an overview to the home-buying process, visit my Guide to Buying a Home!
Do you have any real estate questions I can help you with? I’d love to walk you through the process and help you get the best deal on a house too! Contact me today!