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3 tips for negotiating your first home purchase

Buying a home is probably the biggest financial choice you will make in your life. The process of purchasing residential real estate can be challenging and confusing for first-time homebuyers. If you do not have a plan in place, you may easily pay more for your home than necessary. Preparing yourself is crucial to avoiding errors.

First, you should learn how to negotiate. Understanding the local market is key to effectively negotiating your home purchase. Keep reading for negotiating tips

1. Get pre-approved 

Pre-approval gives you significant purchasing power. When you get pre-approved for a home loan, your lender will send a letter describing your readiness to purchase a home within a specific price range. This gives you a leg up as you start your home search.

2. Conduct research

With so many real estate websites available, you can easily gather important data to formulate your negotiation strategy. Pay attention to price trends, duration on the market and neighborhood comparisons. Analyzing this information will help you determine how to negotiate and how much to offer. 

 

3. Offer differently depending on the market 

In a buyer’s market, you may want to offer between 5 and 10 percent under the expected price. For example, if the seller is asking for $270,000 and you want to pay $250,000, make an offer of $320,000 and begin negotiating. If it is a seller’s market, you likely want to make your best offer as sellers will not waste much time on low-ball offers. You may be able to negotiate on contingencies such as inspections and appraisal.

Sometimes it can be difficult to negotiate the price of a home. If you are dealing with a competing bid, you may want to negotiate terms. Removing certain contingencies or asking for financed closing costs may be possible. If you need help buying your first home with tactical negotiations, talk to a real estate attorney.

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