5 Tips on How To Negotiate a House Price
Updated: May 19, 2022
If you’re interested in buying or selling a house, you’ve no doubt heard the advice that when it comes to pricing your home, it’s important to price it higher than you think you can get.
While this can be good advice in some situations, there are others where this strategy will do you more harm than good.
It’s therefore crucial that you know how to negotiate a house price wisely, so you don’t end up paying too much or accepting too little.
Here are 5 tips on how to negotiate house price wisely and maximize your return on investment when selling or buying property.
1. Don’t accept the first offer
When you decide to buy a house, there will be lots of excitement and anticipation. The sellers might tell you how much they love their home, or how excited they are to move; and it is all true!
As for you, as soon as you step into your new home, all your worries will go away. You’ll finally be able to relax in your dream house.
However, before signing anything or even making an offer, make sure that you have done enough research about its value.
There is nothing worse than getting over-excited when buying something and then find out later that it wasn’t worth what we paid for it!
2. Try to negotiate through a third party
When it comes to negotiations, most of us assume that one side wins and one side loses. This can be true. However, if you can connect with someone who is in touch with both sides—someone such as an appraiser or real estate agent—you might have more luck at negotiation.
Let’s say you’re interested in buying a house and are looking to purchase it for $250,000 but really want to pay $235,000 instead.
Your real estate agent will likely let you know how much he/she thinks that property is worth and why he/she feels it isn’t worth more than $250,000.
3. Consider getting an independent valuation
Before you make an offer, it’s worth getting an independent valuation of your property from a qualified local estate agent.
A professional valuation will give you an objective idea of how much your home is worth and can help you form more informed opinions about what to offer.
In our experience, it’s not uncommon for potential buyers to overestimate their own property’s value and underestimate that of others in their area.
If you need some extra help negotiating, find out if your estate agent offers any assistance with negotiations, or ask friends and family who have recently bought or sold if they would be willing to advise you on pricing strategy.
Any way you look at it, getting an impartial opinion as part of your house-buying process is always helpful.
4. Know your market value
You don’t want to spend your time touring houses that are out of your price range. Before you start looking, make sure you’ve done your research and know how much homes in your area sell for.
Sites like Zillow and Trulia allow you to enter in specific parameters—size, number of bedrooms and bathrooms, lot size—and then they show listings that meet those criteria.
When you go house hunting, consider using a real estate agent so they can give you local insight as well as insider knowledge about what price point buyers are typically aiming for. If a seller asks if you'll pay cash, laugh politely and say no.
A cash offer is usually at or below asking price because there's no room for negotiation with an all-cash buyer—the seller accepts it or walks away with nothing but may also be willing to negotiate down slightly because they won't have to pay any commissions (as opposed to selling through a realtor).
If your financing is approved, tell them right away; most sellers will be happy to know that you're already vetted by a lender since it means there will likely be fewer delays in closing the deal.
5. Get everything in writing
When negotiating a price, there’s no guarantee that either party will stick to what they say. That’s why it’s important to get everything in writing.
A written contract can outline all of your terms for both parties and clarify any misunderstandings before signing.
Remember, sellers have just as much motivation as you do to sell their home quickly and for a great price, so make sure you secure their commitment with a paper agreement before signing.
Written agreements help protect both parties and increase trust during tough negotiations. Having an attorney review your contract is also very important since verbal contracts don't hold up well in court if one side feels like they were misled or deceived.
How To Negotiate a House Price - The Bottom Line
When buying a home, be sure to address all of your concerns with price and terms before entering into an agreement. It’s easy to fall in love with a house and make concessions that you later regret.
Weighing all of your options carefully is critical to avoid getting yourself into trouble with an overpriced home purchase.
Remember, when buying a home don’t forget: location, location, location! Getting your offer accepted by a seller means taking action quickly.
An aggressive timeline can give you leverage when it comes time to negotiate so do what it takes to get back out there as soon as possible once you have your offer in hand.
And if at first you don’t succeed, remember: asking for less money doesn't always mean lowering the final sale price of your new home. Instead think about offering alternative items or services.
It's entirely possible (and common) for offers to get rejected because they're considered too low—then come back months later approved at almost exactly the same monetary amount with more creative concessions included!