8 Negotiating Techniques for Home Buyers
After a great deal of looking and searching, you have finally found your perfect new home and are ready to place an offer. As a home buyer in the Mid-Missouri Region, you must submit a strong offer that distinguishes you from the competition, particularly in a seller’s market. Still, you may be shocked to learn that sellers do not always decide which offer to accept based on the amount of money you are willing to pay alone. Various factors are often taken into consideration before the final decision is made. As a buyer, knowing what these factors are and what you can do to give yourself the best chances of having your offer chosen is a crucial step of the home-buying process. Today, we are discussing 8 negotiating techniques for Mid-Missouri home buyers to help set your offer apart from the competition.
1. Know Your Finances
Understanding your financial bottom line is a great way to clear your head before negotiating a new home purchase. It is vital to be 100% realistic about your current finances, as this tells you how much leeway you have to increase your price, especially when a seller’s market is present. When you are thinking about buying a home in the Mid Missouri Region, we recommend you begin by discussing your situation with a lender to determine what price point you should be at, what interest rates look like, and to determine how much of a down payment you will require. In fact, the lender you choose is more important than many buyers realize. We always highly recommend that you speak with local lenders who are known for excellent customer service and for closing deals on time. Using a respected, well-known, and reputable lending partner is definitely something sellers notice when you submit an offer accompanied by a pre-approval letter.
2. Hire a Real Estate Professional
Many people envision a real estate professional as someone who can help them find their dream home that checks as many boxes as possible. Yet, a REALTOR® is so much more than this! Real estate agents act as your advocate during every step of the home-buying process. They have local market and professional knowledge that allows them to effectively navigate the process based on current conditions.
You may find that as a buyer, you have a very solid idea of the features your new home must offer and those that are not required. Therefore, it is vital to communicate these thoughts with your chosen agent, as a knowledgeable REALTOR® is not only trained to find your perfect home but also to negotiate well on your behalf. Experienced agents will use tried and true strategies that work and will do whatever is needed to get you into your perfect property. Hence, looking for real estate professionals with a reputation for excellence and proven success in your local market is important.
To find the ideal agent for your needs, it is crucial to interview local REALTORS®. Another great way to find a reputable agent is to ask your co-workers and friends if they know a real estate professional who they have had a positive experience with in the past.
3. Research, Research, Research
Conduct plenty of research to compare sale prices for properties that interest you. With this, checking public records online and gathering information will help you confidently determine where and what you want to purchase. Researching this information in advance can help you choose what to pursue or walk away from in a listing. Your agent can play a critical role in this step because they know the local area and can help interpret and understand the data you find.
Many buyers in today’s market compose letters to the sellers as a way to express interest in a property. Quite often, this may also include a family photo or two and detail to the sellers what is loved about the home and why they would love to be the new owner. This letter should be heartfelt but not so over the top that it comes across as desperate. Putting a human face with the offer is simply a really nice touch. And while many people believe that real estate is all about expediency and numbers, it is also a relationship-building business.
Many times, a seller will express a deep desire to sell their house to a family who will love the home as much as they do. Often, you’ll find that sellers are departing from their first home or the one they used to raise their family, which is rooted in happy memories. Hence, it is crucial that the seller feels a connection to you through the genuineness of your letter. Doing this will help the seller feel that you really are the ideal buyer. To add a personal touch, you can:
- Include your children’s names and ages, if applicable
- Add a bit of history about your previous home and how the two properties relate
- Your struggles, education, or occupation that got you where you are
- Explain why you think you deserve to own the home and how perfectly you will care for it
- Add a list of reasons you love the home
Though this is not a required step in placing an offer on a property, many buyers choose to do it, particularly in a seller’s market where you are likely to compete with other home buyers.
5. Start With Your Best Offer
When the stakes are high, bidding wars are common in a seller’s market, but as we mentioned, it’s not always about the price. Raising the purchase price with escalation clauses may be a common strategy, but there are other ways you can stand out and make your offer more attractive. Removing, adding, or modifying contingencies is a creative way to help you stand out from the masses. For example, you can entice the seller with a faster closing date, add a larger good faith down payment, or offer more flexibility with closing dates if the seller is also looking for a new home to purchase.
Though many lenders do not require home inspections for septic, water, radon, or termites, the importance of such inspections should not be ignored. After all, these inspections can reveal a lot of information about the house. Discovering that the home has mold, foundation cracks, or a leaky roof is an excellent way to give the buyer negotiating power since these items will need to be repaired eventually. Even if you do not plan to ask the seller for repairs, completing inspections is still vital to help you make an informed decision. If the local market is highly competitive, you can ask your REALTOR® to include the opportunity for inspections without the intent to ask for repairs in the offer letter. Another alternative to waiving inspections is buying a home warranty, as they are affordable and offer extensive coverage.
Be sure to ask your real estate agent about other contingencies you can consider to make your offer more competitive. Always present your best offer first, and do not hold back on the maximum amount you can afford. If you do not present your best offer first, it may mean that the seller skips over your offer and enters a contract with another buyer.
6. Keep Your Offers Tight
By now, you should already know how far you are willing to stretch your finances. You should also have a complete understanding of what the current local market conditions are so you know the right amount to offer. In a seller’s market, you most likely will not get away with offers that are below the asking price. The truth is that you may even have to offer over the asking price to win the home. In some markets, you may be able to offer less, but your REALTOR® will have a strong understanding of the local market and can help decide what will give you the best chance to win. In the current home market, there are more offers than there are available properties, so a low offer may even offend the seller.
7. Submit a Clean Offer
Writing and submitting a clean offer is imperative. So, avoid leaving out any essential elements or giving the seller a reason to counter your offer. Your primary goal is to create a written contract that is easy to understand and makes the seller want to sign the offer the way you submitted it. You can achieve this by ensuring that:
- The address is correct
- Calculate the loan amounts, earnest money deposit, and down payment balance to verify all numbers total the sale price
- Check the possession terms and closing date
- Explain motivations for altering the contract default periods
- Review the buyer and seller-paid items and determine if any of the items are red flags
- Review the amount of time you are providing the seller to respond and who should receive the response to allocate acceptance
It’s also worth mentioning that you should avoid allowing small issues to turn into bigger issues. For instance, the buyer customarily pays the escrow and title fees. These are generally small amounts and may be items you should avoid asking the seller to cover. Not only can it make your offer unattractive, but they may receive several other offers that do not ask them to cover the items.
8. Understand When to Walk Away
Remain neutral, level-headed, and reasonable. This is more important to the home-buying process than you may know. Buying a house can be a very emotional process, so it can be easier said than done. During this step, it’s best to have a clear budget set and stick with it. Try not to get emotional and walk away if it is necessary. The truth is that some sellers are unreasonable, but overpriced listings are more likely to sit on the market for longer durations. Nice houses that are competitively priced can (and usually do) draw multiple offers under any market conditions. However, in a seller’s market, they most certainly will. Do not allow this market trend to put you above your budget or agree to concessions (like waving inspections) when it is simply not in your best interest to do so.
Knowing how to create an effective and attractive offer on an available property means clearly understanding the market, what competition may be present, and more. Having a professional REALTOR® in your corner when it is time to place an offer on the house means you have an industry expert on your side who will guide you through the home-buying process from start to finish and ensure that you are submitting the strongest offer with the best possible terms for your unique situation.
Our team of real estate professionals is always hard at work securing contacts for our clients, even in strong sellers’ markets. How can we assist you in finding your perfect home? Do you have questions about the home-buying process? Call us today or complete the form below with any needs or questions you have, and our team will be happy to help with all of your real estate needs. When you partner with us, you can rest assured that you never have to go through the home-buying process alone!