Few things are more exciting than purchasing your first home. Once you find a house you love, you’ll likely be eager to make an offer right away. But take a step back and remember that buying a home is a major negotiation. The initial listing price is simply a starting point. With smart negotiating tactics, you can often get the seller to agree to a lower, more favorable price.
Do Your Research
Before you make an offer, take time to thoroughly research the property and neighborhood. Look at comparable homes that have recently sold in the area to gauge an accurate market value. Drive by those other homes and compare lot sizes, square footage, and external features. This will give you solid data to back up your offer price.
Also research the seller’s situation to gain insight for negotiations. Have they already purchased another home and need to move quickly? That may make them more motivated to sell. Are they testing the market but not in a huge rush? They may be willing to wait for a top dollar offer.
Get Pre-Approved
Having a pre-approval letter from a lender makes your offer much more attractive to sellers. It shows you are a serious buyer able to obtain financing. Submitting an offer without a pre-approval wastes valuable time since the seller will just ask for proof of your financing ability anyway. The people at Mortgage Maestro recommend running the numbers with your Colorado mortgage broker to get pre-approved before house hunting.
Additionally, get pre-approved for a little more than you ideally want to spend. This gives you wiggle room to bid over the asking price if needed while still landing within your target budget. Having financing pre-arranged also allows you to act quickly when you find the perfect home.
Assess Your Budget Realistically
Know your hard limit on price but also look for areas where you have flexibility. For example, if the home needs cosmetic upgrades, determine if you can take on those projects yourself over time to save money. If your limit is $350,000, offer $340,000 but make it clear you’ll handle minor renovations.
Write a Strong Offer Letter
Your offer letter is your chance to make a great first impression and persuade the seller to accept your terms. Be clear and direct about the offered price and proposed closing date. Include your pre-approval letter and proof of funds for the down payment. Stating you’re a first-time buyer but plan to stay in the home for many years can also tug on heart strings.
Avoid Contingencies
Common contingencies that weaken offers include sale of the buyer’s current home, home inspections, and financing. Remove as many contingencies as you can stomach to make your offer more attractive. Forgoing the financing contingency is fine if you’re pre-approved. Skipping inspections is riskier but can get your offer accepted.
Be Ready to Negotiate and Compromise
When submitting an offer below the asking price, you must expect some back and forth. Don’t play hardball and shut down negotiations. Be willing to consider creative compromises like covering closing fees or making repairs to bridge the gap.
Close the Deal
Once your offer is accepted, follow through and close the purchase professionally and efficiently. Avoid delays securing your new mortgage, obtaining home insurance, or completing inspections. The longer the closing process drags on, the more likely the seller is to get cold feet.
Conclusion
With the right preparation and mindset, negotiating a win-win home price is completely achievable. Do your diligence upfront to determine a fair offer. Then work closely with the seller to reach an agreement that fits both your budget and their needs.
