Negotiating Tips For Home Buyers
This article is the first of two that discusses negotiating strategies for buying a new home. I will be posting part two in the coming weeks.
This article is the first in a series about the art of real estate negotiating. Please be aware that my area of expertise is within the Antelope Valley real estate market. Certain rules may not apply in your area. Even if you don't live in the Antelope Valley you should continue reading; this is an excellent guide that can be used by anyone who is looking for a new home no matter where you are from.
Let the negotiating games begin
I like to think of negotiating for the purchase of a house as a debate between the property owner and their real estate agent and the home buyer and their real estate agent (or property attorney). You have the property owner and their agent setting up the asking price for the home and then you have you and your agent trying to bring that price down. One of the methods the owner uses to arrive at the selling price is to get the house appraised by an independent appraiser. More often than not they will also use the prices of recently sold homes that have comparable features known as "comps" as their main reference point for pricing the house.
It is up to you, the buyer to questions these comps and to cast doubt upon the value they set on the house. Some of these questions include;
Regardless of how long ago they sold, ask to see the listing prices of these comps before they sold. This will offer insight into the local market and offer a great opportunity to come in well under their asking price if the market is soft. If you have done your job properly, you have cast doubt upon the value of the home and save thousands of dollars.
Here is a common argument that the owner or their agent might use to support the price of their house.
"A house around the corner just sold for $450K"
Sometimes this is like comparing apples to oranges. Neighborhood comps are a pretty good starting point for determining a houses value, but it is up to you to persuade the home owner that each house is unique and that each one has their own intrinsic value. Just because the house around the corner just sold for $450K doesn't mean that this house is worth that much. It is not uncommon for people to over pay for a house. Just because someone else paid too much doesn't mean that you have to.
In the art of negotiation, you must counter every point they make about the house's value with something that will diminish their claims. It is a good idea to prepare yourself with key points and practice countering these in advance. The more you counter their selling points, the more difficulty they will have justifying their price. You must convince them that their price is too high, otherwise they would have already found a buyer. Let them know that they have someone ready to purchase right now and the longer they wait, the more it will cost them in ongoing mortgage payments.
They may respond by saying something like "We had someone looking at the house today who absolutely loved it and is ready to make an offer. Don't fall for it. I know and you know that if they were really that interested in making an offer they would have already given them a deposit.
The next article in this series will focus on some great negotiating techniques you can use to hammer down the price. Remember, your not here to make friends. You are here to get the best possible price on one of the most important purchases of your life time.
Visit my site if you would like more tips and tricks about buying and selling homes in the Antelope Valley Real estate market.
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ABOUT THE AUTHOR
Christopher Ronk is a marketing professional working for CLM Homes in Lancaster California. You can find more information about CLM Homes at their website http://clmhomes.com