Thinking about buying a home, but not sure how to negotiate price?
If you're like most home buyers, you have two primary considerations in mind when you start looking for a home. First, you want to find a home that perfectly meets your needs and desires, and secondly, you want to purchase this home for the lowest possible price. When you analyze those successful home buyers who have been able to purchase the home they want for thousands of dollars below a seller's asking price, some common denominators emerge. Although your real estate agent's negotiating skills are important, there are additional key factors that must come into play long before you submit an offer.
These Steps Will Help You Save Thousands When You Buy a Home
Make sure you know what you want.
As simple as this sounds, many homebuyers don't have a firm idea in their heads about what they want before they go out searching for a home. In fact, when you go shopping for a place to live, there are actually two homes competing for your attention: the one that meets your needs, and the one that fulfills your desires. Obviously, your goal is to find one home that does both.
But in the real world, this situation doesn't always occur you're looking at homes. You'll find that you fall in love with one or another home for entirely different reasons. Is it better to buy the 4-bedroom home with room for your family to grow, or the one with the big eat-in kitchen? What's more important: a big backyard, or proximity to your child's school?
Far too often people buy a home for the wrong reasons and then regret their decision when the home doesn't meet their needs. So our advise is:satisfy your needs first when looking for a home. If you're lucky, you'll find a home that does this and also fulfills your desires. The important thing is to understand the difference before you get caught up in the excitement of looking at houses.
We offer our clients with a customized search directly from the MLS to satisfy all of their criteria (both needs and desires) when it comes to searching for a home. This type of access allows you to receive live notifications when new homes hit the market and when prices change, so you're the first to know of updates and can take note of ALL available information on an ongoing basis to find your next home.
To help you develop your home buying strategy, use this form:
What do I absolutely NEED in my next home (my "must-haves"):
1. ______________________________
2. ______________________________
3. ______________________________
4. ______________________________
5. ______________________________
What would I absolutely LOVE in my next home (my "nice-to-haves"):
1. _______________________________
2. _______________________________
3. _______________________________
4. _______________________________
5. _______________________________
How Sellers Set Their Asking Price
For you to understand how much to offer for a home you're interested in, it's important to know how sellers price their homes. Here are 4 common strategies you'll start to recognize when you begin to view homes:
1. Clearly Overpriced. Every seller wants to net the most amount of money for their home, and real estate agents know this. If more than one agent is competing for your listing, an easy way to win the battle is to overinflate the value of your home. This is done far too often, with many homes that are priced 10- 20% over their true market value. This is not in your best interest, because in most cases the market won't be fooled. As a result, your home could languish on the market for months, leaving you with a couple of important drawbacks: your home is likely to be labeled as a "troubled" house by other agents, leading to a lower than fair market price. When an offer is finally made you have been greatly inconvenienced with having to constantly have your home in "showing" condition . . . for nothing. These homes often expire off the market, forcing you to go through the listing process all over again.
2. Somewhat Overpriced. About 3/4 of the homes on the market are 5-10% overpriced. These homes will also sit on the market longer than they should. There is usually one of two factors at play here: either you believe in your heart that your home is really worth this much despite what the market has indicated (after all, there's a lot of emotion caught up in this issue), OR you've left some room for negotiating. Either way, this strategy will cost you both in terms of time on the market and ultimate price received.
3. Priced Correctly at Market Value. Some sellers understand that real estate is part of the capitalistic system of supply and demand and will carefully and realistically price their homes based on a thorough analysis of other homes on the market. These competitively priced homes usually sell within a reasonable time-frame and very close to the asking price.
4. Priced Below the Fair Market Value. Some sellers are motivated by a quick sale. These homes attract multiple offers and sell fast - usually in a few days - at, or above, the asking price. Be cautious that the agent suggesting this method is doing so with your best interest in mind.
At Madden Realty Partners, we are proud to have over 15 years of home selling and buying experience, with negotiation being a key part of our success strategy. We're here to help you find and purchase your dream home at the right price. As your real estate agent, we will take the time to do thorough market data research to discover if the home you're interested in is priced correctly, or over/under its market value. We'll also investigate other key factors to help present you with the data that you need to decide what to offer when buying a home.
If you or anyone you know is looking to buy or sell, put our 22+ years of experience to work for you! Give us a call today at 480-226-7373.
