In recent years, most experts have looked at real estate trends and generally declared a sellers’ market—particularly in urban areas like Boston, where the hottest properties disappear in the blink of an eye.
But that doesn’t mean that buyers don’t have any leverage, or options. No matter what, negotiation is an integral component of the home buying process. Just keep in mind that you should be focused on value rather than spending the fewest dollars—that way, you’re more likely to end up with the right home at a good price.
Do your research—and your math. The more you know about the market and the value of a home, the better off you’ll be when it comes time to make an offer. There are no hard and fast rules for measuring the value of a home, but there are myriad factors you’ll need to consider if you want to close the deal, from the price of comparable homes in the neighborhood to the condition to the seller’s reasons for moving.
You’ll also want to go into any negotiation with a good understanding of real estate math–which admittedly can be tricky. But simply looking at the home price in total dollars isn’t good enough. By contrast, if you know your mortgage rate and how the home price will actually translate into payments over the long term, you’ll have a much better picture of what you can and can’t afford (and where there’s wiggle room for negotiating).
Be pre-approved and ready to buy. This is absolutely critical—if you’ve already been pre-approved by your lender for a mortgage loan, and can show that to the seller, they’ll take your offer much more seriously. If you haven’t been pre-approved and are simply shopping around, you’re probably not ready to start negotiating a price.
Don’t be too stubborn—compromise is a part of the process. Everybody’s looking for their dream home, but here’s the truth: virtually nobody gets everything they want when they buy a home.
If you come into the negotiating process expecting you’ll get the perfect home for an unbelievably low price, you’ll only set yourself up for disappointment. But if you come into negotiations with an awareness that everybody gives a little—and gets a little—you’re more likely to reach an agreement that satisfies all parties.
Work through an agent. Pretty much everyone decides to sell their home through a real estate agent, but with the many online options and listings available, not everyone will turn to an agent when it comes time to buy a home. However, this is usually a mistake. Agents have the know-how and experience to negotiate the best price for you—in fact, no amount of research can make up for the resources and first-hand knowledge available to an agent. A good agent will also know how to handle negotiations with the seller’s agent and ensure that the sale actually closes—which is what matters most in the end.
For more information on home buying and answers to your burning questions, contact Phil Ganz at Fairway Mortgage Corporation today!