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Homebuyers, How Much Can You Really Negotiate?

In an ideal world, every homebuyer in the market would offer exactly what they wanted to pay, and home sellers would happily accept all fair offers. It’d be a win-win for all involved.
But buying and selling real estate is never done in an ideal world. Buyers and sellers often engage in a push-and-pull on price and other terms of a home purchase. It often takes some negotiation for everyone to feel like they’ve arrived at a win-win.
Conditions in local markets can dictate how much give-and-take there is between parties in a home sale. If you’re a home buyer, how much can you really negotiate?

Is it a seller’s or buyer’s market?
What’s known as a buyer’s market occurs when there are more homes available for sale than there are potential buyers in the market. Market conditions are such that home sellers are competing for buyers who have a lot of homes to choose from.
The opposite is true of a seller’s market, which is the case when there are more homebuyers in the market than there are homes for sale. The high demand for homes means buyers, not sellers, are competing against each other for a scarce commodity.
In a seller’s market, homebuyers will likely encounter multiple-bid scenarios when they make an offer on a home. Multiple offers can mean a lot of things – not just a bidding war over price, but also the possibilities of waived contingencies waived inspections, and more.
Contingencies protect both you and your lender. It’s smart to have a home inspection before a deal closes. An appraisal contingency can keep you from overpaying. A financing contingency means you aren’t on the hook if your loan falls through. Those buyer protections are there for a reason, and waiving your right to them can be risky.
However, in a seller’s market where multiple offers are common, you’ll likely be up against other buyers who will waive them.

Can you structure the money for a win-win?
Sellers basically want two things when they’re selling a home: the most money possible and a quick sale. If you’re a buyer who can meet those needs, a seller might be willing to help you with some of your needs.

For example, if you’re concerned about how much out-of-pocket cost you’ll incur to complete the sale, you can offer a higher purchase price in exchange for some cash at close. Home sellers can contribute to a buyer’s down payment and closings costs, which you’d be able to use to pay less out of your own pocket. Over a 30-year repayment period, the extra money you’d pay at the purchase price – especially when interest rates are very low – might only add a few bucks a month to your house payment.
If you’re paying the asking price or higher, the seller gets what they want. If they help with your upfront costs, you get what you want. It’s just a matter of negotiating the structure of the deal’s financial terms.

What can you ask for?
Normally, everything in a house sale is negotiable and everything has a price. If you like the seller’s art, couch, or barbecue grill, you can ask that it be included in the sale. In a seller’s market, however, it can hurt your offer. The seller will get bids from buyers willing to pay the same amount as you but who don’t want their possessions.
Repairs are similar. Sometimes, buyers will ask the home seller to complete some work before signing the contract. In multiple-offer situations, however, you might not want to demand the home be in pristine, move-in condition.

If you want your offer to be more competitive, you might also offer to give the seller flexibility when it comes to closing and move-in dates. If you let them set the timeline, they could be more willing to budge on something else you’d like.

The bottom line
A homebuyer’s negotiating power often depends on whether the market favors buyers or sellers, but things other than price can be negotiated, and a win-win isn’t always out of the question even in an unbalanced market.

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