Eight Rules Every Buyer Should Know Before Starting a Negotiation

If you decide that you want to negotiate, that is, make a counter offer to the seller's counter offer, your agent will use his negotiating skills to help you get the best possible deal.

It's what real estate agents do every day. But there are always things you can do. If you understand what trading tactics are available to the broker (depending on the type of market and what your position is), you will be able to support them. And support him in what he does.

Here are eight rules that every buyer should know before the negotiation begins:

1. Act fast, right now

When you receive a counter offer, you should respond quickly, ideally within 24 hours. The longer you wait, the more chance another buyer will have to seize the opportunity and seize the property. Anything else? Yes. If a seller feels you're hesitating, they may withdraw your counter offer before you can respond.

2. Raise the price (within reason)

While you obviously don't want to overpay for a home, you may need to raise your initial bid, especially if the initial offer was low. Rely on your agent's experience to determine how much money to add to the sales price to make it more attractive to the seller.

Then, through his powers of persuasion, your agent can make the counter offer seem even more attractive by pointing out similar deals: recently sold homes in the area that are comparable in terms of square footage and features.

As your agent negotiates, it can seem like things are escalating quickly. It's stressful. You may feel a sudden urge to do whatever it takes to win.

Before going to those extremes, remember two very important things:

1. You cannot exceed the monetary limits of the mortgage pre-approved by the credit institution.

2. You cannot exceed the budget you have.

Your counter offer should be an amount that you feel makes sense to spend on a house. You want that new house and also to continue living your life. Plus: you still have options.

3. Increase the deposit

Raising the deposit (EMD), the amount of money you put down to show the seller that you are serious and committed to the deal, is another way of showing the seller that you are willing to risk more to buy the house. A standard EMD is typically 1% to 3% of the home's sales price. Countering a 3% to 4% deposit might be what you need to persuade the seller to take your side.

4. Demonstrate patience to take ownership

Depending on the seller's timing, changing the proposed possession date (the expected date to move into the property) could also improve your offer. If the seller wants to stay in the house for a few more days after closing, try offering a later possession date. You can also set up a “rental sale” agreement, where the seller pays you rent to stay in the house for a set period of time after the closing date.

5. Eliminate some contingencies, but carefully

Want to make your counter offer even better? Reduce the number of contingencies you request. It's your way of saying, “Look, I have fewer ways to back out,” which will give the seller more reassurance that the deal will close. But be selective: some contingencies are too important to abandon. A home inspection contingency (meaning the right to do a home inspection and request repairs) gives you a way out if you spot major problems with the property (and saves you from ending up spending a pretty penny fixing up the house).

6. Ask for fewer concessions

At closing on a mortgage, buyers must pay closing costs, which include taxes, lender fees, and title company fees. These costs vary by location, but are generally between 3% and 4% of the sales price of the home. The seller pays an additional 1% to 3%. (SmartAsset.com and Nerdwallet.com have simple calculators you can use to get a rough idea of ​​what your closing costs might be.)

In your initial offer, you can ask the seller for a cash payment at closing, called concessions, to help you cover the closing costs you face. (It is less feasible to request it if there are several offers). Concessions reduce the seller's net income. Making a counter offer that removes them increases the amount of money the seller receives and may improve your offer.

7. Pay the cost of the home warranty

Sellers sometimes offer prospective buyers a home warranty to cover the cost of repairs to major appliances and systems, such as the air conditioning or heating system, if they break down within a certain time frame (usually one year). after closing).

A basic home warranty costs between $300 and $600 a year, according to Angi. If you think that waiving this guarantee can improve negotiations, but you want the peace of mind of having this protection, tell the seller that it is not necessary for him to take care of it and buy it yourself.

Just keep in mind, regardless of who purchases the warranty, that you will have to pay a service fee (usually between $50 and $100) if something actually needs to be repaired during the warranty period.

Another important thing: The home guarantee is something completely different from home insurance, since this insurance is the coverage that protects the structure of your house and the assets that are in it in case of fire, storm or other accident, and it is Mandatory if you are granted a mortgage. It can cost between $300 and $1,000 per year.

8. Recognize when it is necessary to say goodbye

When negotiating with a seller, trust your gut and your agent. If your agent tells you that a deal is not good for you, it's important to listen.

And if you no longer want to give up things, and the seller does not budge from his position, it may be best to end the negotiations. It can be a difficult decision to make, and for good reason! Negotiating is difficult. It is exhausting.

Estee Soto

Estee Soto is a real estate agent with eXp Realty, a certified mentor and eXp Latino ambassador, and the CEO and founder of TagCrush LLC, an all-in-one digital marketing platform for real estate agents. She leads the TAGHOMES team, specializing in luxury properties, new developments, and international buyers across Florida.

More information about Estee Soto HERE