Things you’ll typically hear and read about during a buyer’s real estate market include low home prices, large inventories of available homes and little competition from other buyers. While homeowners naturally want to get top dollar for their homes regardless of market conditions, buyers’ markets present an opportunity for those hoping to jump into home ownership an amazing opportunity to find a good deal.
In a buyer’s market, sellers are typically more motivated to negotiate. This puts you, as a buyer, in the driver's seat. Negotiating points include not only the obvious, the sales price, but other items as well. We’ve picked out three parts of the purchase process that present the most savings for buyers.
1. Bargains Lurking in the Purchase Agreement
When you write an offer to purchase, ask for everything. Even if you don't want their furniture and appliances ask for them. Ask for the drapes, the barbecue, everything you can think of to put the sellers in overload and divert their attention away from the low price you are offering.
Once the bartering begins all of their focus will be on trying to hang on to their backyard furniture, not that you have offered considerably less for the house than what they are asking. Now you are in a position to compromise.
So, go ahead and give up the furniture and the drapes; you didn't want all those items anyway. Keep your eye on what it is that you do want ― your price. In the end, if you persist, you should get that price and maybe that backyard furniture as well.
One more point about what to include in the purchase offer: make sure you don't give the sellers too much time to think about your bid. A 24-hour acceptance requirement is quite common and a strategic step in your position as a bargain hunter. Not only does this request create a sense of urgency for the sellers, but it cuts down the chances of another bargain hunter making a better offer.
2. The Home Inspection ― Your Ticket to a Deal
Although the sellers, by law, must disclose the problems in the home that they know about, there may be items lurking beneath their awareness. Just proceed under the assumption that if there are visible and known issues with the house there are most likely others that are not obvious. Therefore, unless you are a licensed General Contractor, you should always get a home inspection.
With the hard copy of the inspection in-hand, and depending upon the extent of repairs needed, this is your chance to negotiate a further price reduction. You will need to obtain estimates for the repairs from local licensed contractors. You then have rational support for your requests to the sellers.
Walk away if the owners are unwilling to work with you. It is entirely within your rights under the purchase agreement to do so. Most sellers, however, realize that the repairs will need to be done if they hope to make a sale to anyone, so they are likely to entertain your new bid.
If the cost of needed repairs is beyond the sellers' current budget, you might suggest a cash-back at the close of escrow incentive. That way, the homeowner doesn't have to pay out-of-pocket for work and you will have cash-on-hand to have the repairs performed on your schedule.
3. Eliminate Your Closing Costs
In a buyer's market, innovative negotiating is just one of the tools in your chest. Negotiating closing costs may be your last resort, especially when dealing with a particularly difficult and unrealistic seller.
Yes, some will balk at being asked to pay your closing costs. Others will increase the selling price of the house to absorb the costs. There is a danger in this, however. Any addition to the price may cause a problem with the appraisal. At that point, it is back to the negotiating table for buyer and seller.
On a final note, the sale of one's home is an emotional event. There are ways to present the suggested negotiations while still appealing to the sellers' emotions. If your low-ball approach is due to your financial position, have your agent share that with the homeowners. Let them know how terribly much you want the house and make them care about you enough to want to help you. An aw shucks personality will take you a lot closer to your goal than a brusque, no-holds-barred aggressive one.