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Tips for Negotiating Your House Price

A couple celebrating the purchase of a home after having negotiated a deal.

When buying a home, the success of a negotiation will depend on your understanding of the market value, your current financial circumstances and any influence that a property inspection or other supporting documentation could have, among other factors. A successful negotiation could mean saving tens of thousands of dollars in the long term. Here’s a roundup of practical tips that could help you negotiate for a deal on the purchase of a home.

For more hands-on help, a financial advisor can guide you in creating a financial plan to turn your homebuying goal into a reality.

What to Do Before Negotiating

When it comes to a real estate deal, you could generally negotiate the purchase price, closing costs, the closing date and contingencies. Though, you will also need to have a firm grasp of the market value and your finances.

Understanding the market value of a property will help you to make informed and competitive offers, avoid overpayment and complete a fair and successful transaction. One way to do this, can be to check recent sales of similar homes or bring in a professional appraiser for a targeted assessment.

Having a clear picture of your overall finances is also critical for a homebuying negotiation. This means having a full understanding of your income, expenses, savings and credit standing. Additionally, securing pre-approval for a mortgage will verify what loan amount you could get, which could show sellers that you are ready to make a deal, but can also move on if the terms of the negotiation are not suitable.

Finally, you may also want to look up public records to uncover any potential liens or encumbrances that could affect the property’s title. Having this information at hand could help you make a more compelling offer in a negotiation.

Negotiate Based on Inspection Results

A couple reviewing the negotiated terms in a contract agreement for the purchase of a home.

A home inspection can provide you, the buyer, with essential information about the condition of a property. This could enable you to negotiate repairs, lower the purchase price, or gain concessions based on the identified issues.

Here are five common steps to follow when negotiating with a home inspection:

1. Review the inspection report and list all identified issues.
2. Categorize the defects based on their severity and potential cost implications.
3. Assess which issues are most important to you and the compromises you might be willing to make.
4. Prioritize the defects that significantly affect the property’s value and safety.
5. Initiate the negotiation by discussing major concerns with the seller and propose reasonable solutions.

Negotiate for Things Other Than the Price

In addition to the purchase price, buyers can negotiate non-price terms that can sometimes provide substantial benefits. Here are five common non-price things that you may want to negotiate for:

  • Home warranty inclusion: This can offer long-term security and potential savings on future repairs, and a common bargaining chip while the seller maintains their price.
  • Home repairs: Maintenance can be negotiated based on the condition of what you’re buying, especially if the owner didn’t disclose it ahead of time.
  • Closing costs: Negotiating who handles these can lead to immediate savings for one party.
  • Timeline for the closing process: This may be beneficial to you if you can push back or move up the purchase based on your specific circumstance.
  • Fixtures or items to be left in the house: These are also common negotiating asks, and depending on their quality and condition could save you additional money if you don’t have to replace them.

Know When to Walk Away

The fear of missing out could influence you to spend more money than you should. And, on the other hand, you may also be tempted to take an offer that is too low to pass up. But generally, you should consider walking away from a home purchase negotiation if:

  • the inspection reveals significant, undisclosed issues
  • the seller is unwilling to address critical concerns
  • the terms and conditions are unacceptable for your financial or personal situation

Additionally, while market conditions could pressure you to buy at a higher price or accept a mortgage with a higher interest rate, you should note that timing the market for more favorable conditions may not always work out, depending on your specific financial needs.

For example, buying a home when mortgage rates are higher could mean that you will pay more over time on that loan for the purchase. But, it could also mean that because you are potentially competing with fewer buyers, you might be able to find a lower purchase price and as a result look at homes that would have otherwise been out of your reach in markets with lower interest rates.

Ultimately, your decision to buy a home will depend on your specific needs, no matter which market you could be in, and whether you can make the math work for your finances. If the math does not work, even during the best of opportunities, you may want to seriously consider walking away.

Bottom Line

A homebuyer considering whether she can negotiate the purchasing price of a home.

Negotiating for the purchase of a home could allow you as a buyer to secure a beneficial deal. Common negotiation asks include lowering the purchase price, as well as paying for home repairs, home warranty, closing costs and other non-price things. To increase your leverage in a negotiation, make sure you have a clear understanding of the market value of the home and your specific finances. Additionally, you can use a home inspection and research public records to make a more compelling bid.

  • A financial advisor can help you create a long-term financial plan that will take into account your home purchase. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • If you’re looking to buy a home, consider using a free home affordability calculator to help you determine how much you should spend.

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