When it comes to big goals for 2023, splurging on that high-end home you’ve been dreaming of and moving in to start your new life in the lap of luxury is a great one to tick off before the year is out.
But whilst there’s no denying that it’ll probably be one of the most exciting things you’ve done in a while, purchasing a new home can be daunting – especially for first-time homebuyers who are unfamiliar with the nuances of real estate transactions – and knowing how to play the game will go a long way towards getting you the house you have your eye on for a good price.
Negotiation plays a crucial role in the home buying process, and without navigating this effectively, you may find yourself paying more than you need to. Even if you’ve got plenty of money to spare, it would be better spent on redecorating and splashing out on some extra-luxe features to make your new home your own, so it’s important to go in armed with the tools you need for success.
Negotiation is important in real estate transactions because it allows both parties to work toward a beneficial outcome. Homebuyers can negotiate on price, closing costs, repairs, and other terms of the sale to ensure they are getting a fair deal – plus, it also allows buyers to prioritise their needs and wants and make informed decisions about what they will and won’t compromise on to secure their desired home.
These are the steps you should take before and during the negotiation to get the home of your dreams, on your terms.
Research
Conducting thorough research will provide you with valuable information about the property you’re considering, as well as the real estate market, and comparable homes in the area. Armed with this knowledge, you’ll be able to make better informed decisions about the price you are willing to pay and what kinds of negotiations may be necessary.
Research may include factors such as the home’s condition, age, location, property taxes, and ownership history. It might also involve finding out about the local housing market and comparable homes to determine the property’s fair market value – information that can give you an edge in the negotiation process and enable you to make a reasonable offer and stand your ground during negotiations.
Doing some digging will also mean you can identify any potential issues or defects with the property and address these during negotiations, too. Doing so may allow you to negotiate a lower price before finalising the sale.
Consider using a real estate agent
A real estate agent is a valuable asset when negotiating the best deal on a new home. Agents have expertise and experience in the real estate industry and can provide you, the buyer, with valuable insight about the process and the local market.
Real estate agents have access to data on the local real estate market, which can help you to more effectively determine the fair market value of a property and make an informed offer.
Plus, you’ll need the expertise of someone who really understands how to negotiate real estate deals to your advantage, and can use their skills to help you secure the best possible deal on a property whilst mitigating any potential issues in the process.
Agents may also have access to off-market deals that are not publicly listed, giving you more choice and potentially, an edge in negotiations. And, they often have a professional network of industry contacts, such as home inspectors and mortgage brokers, which can come in handy and facilitate the buying process.
One of the biggest benefits of working with a real estate agent is their access to the Multiple Listing Service (MLS) – a database that only they have access to and that can be used to find homes for sale in the locations desired by potential buyers like you.
Searching for real estate in a specific location and navigating the many options available can be overwhelming. There are, however, some trusted online real estate resources, like EZHomeSearch, that can make it easy to find the right property for you.
Know your limits
As a homebuyer, you need to be aware of your financial limits and understand what you can afford, as this can help you set a realistic budget and make a reasonable offer for the property you want. If money is no object, then it can be tempting just to go with the flow and pay the asking price, but you should avoid splurging money when it isn’t necessary to do so as you could end up paying far more for a property than it is actually worth and could even make losses later on when you decide to sell.
Your desired location, property type, and any specific features you are looking for in a home all have financial implications, so bear in mind how they might affect the amount you’ll need to pay to secure your dream property.
When you know your limits – or at least, set some – you can approach negotiations with a clear understanding of what you are willing to pay and what you are not, avoiding overpaying for a property or agreeing to terms that are not in your best interest.
Don’t appear too keen
When a buyer appears overly enthusiastic, it can show the seller that they are willing to pay more for the property, which can in turn mean that the seller is less willing to negotiate on the price or other terms of the sale.
To avoid appearing too interested, approach negotiations calmly. You should ask questions about the property but avoid showing too much emotion or enthusiasm.
Make the first offer
When a buyer makes the first offer, they set the tone for the negotiations and can establish a starting point for the price and other terms of the sale.
By making the first offer, you’ll signal to the seller that you are serious and committed to the purchase, which may well make them more willing to negotiate, resulting in a more favourable deal for you as the buyer.
Be prepared to make counteroffers
Once a buyer has made their initial offer, it is common for the vendor to respond with a counteroffer that may be higher than your initial offer. By making counter offers in response to theirs, you can continue to negotiate for more favourable terms.
A counter offer can result in adjustments to the purchase price, closing date, contingencies, and other terms of the sale, and can help you to find a middle ground with the vendor, ultimately reaching a more favourable deal. However, as a buyer, you’ll need to keep your budget and the property’s market value in mind to avoid making an offer that is too high. By using counter offers, you can negotiate a fair price that represents the property’s true value.
Close the deal
A deal is closed when the buyer and seller reach an acceptable agreement and sign a purchase contract.
Once a deal is closed, it implies that all aspects of the transaction have been agreed upon, including the price, closing date, and any contingencies or conditions. This completes the sale and transfers property ownership from the seller to the buyer. The buyer and seller can then move forward with their respective plans, which means at this point, you can secure financing and prepare for the move. At the same time, the seller will be able to go ahead and finalise any necessary arrangements for their next home.
The bottom line
While closing a deal can mark the end of the negotiation process, it is important to note that communication and negotiation may still be necessary throughout the closing process, particularly if issues or concerns arise. However, the goal of negotiating a deal is to reach a successful agreement and close the transaction, which completes the sale and transfers ownership of the property. Once you’ve done that, and your dream property is finally yours, it’s time to move onto the fun stuff – like moving in, injecting some personality into it and adding all of those standout features you’ve been lusting after.
