For most if not all of us the purchase of a home will represent the largest expenditure of money at one time that we have ever made by a factor of many times.
In addition to the money spent, the first new home will also typically represent a transition of some kind whether away from home or out of a rental.
The move can also be in conjunction with a life changing event such as marriage or the start of a family and the need for more space. Whatever the reason it can be an extremely anxiety provoking endeavor.
When my wife and I were ready to move out of a two bedroom apartment in New York City and out to the suburbs the process of finding a house, any house, that we were interested enough in to pursue took quite some time.
When we finally did make an offer we were negotiating against a bidder who went direct to the owners and not through a broker as we had, which put us at an extreme financial disadvantage. We lost the house.
The second time we found a house that we wanted to bid on it was ‘for sale by owner’ and we negotiated and ultimately bought the house. That was in 1994 and while we love the house and have loved living where we live, I only wish that we had some of these negotiating ideas at our disposal as they would have come in extremely handy at the time!
Advice for negotiating the purchase of your first home!
- Know the market – It sounds like an obvious thing to do but many prospective buyers don’t do as much research as they could. Websites like Zillow.com or Trulia.com are extremely helpful, as is finding local real estate companies who may have blogs that discuss values in the specific market area. Even something as basic as reading about recent sales in local newspapers is often overlooked. Remember that sellers can ask whatever they want but that number is not necessarily where the market for the property should be.
- Know the seller as best as you can. Are they motivated? Are they relocating and therefore need to sell? Are they retired and want to move but whether it’s this year or next doesn’t really matter? Ask questions to try and find out the sellers reasons for wanting to get out.
- Keep a poker face. As much as you want to learn the sellers motivation for selling, do not let them know your motivation for buying. In other words try to maintain the upper hand.
- Don’t make lowball offers as it will both insult the seller and make them less inclined to take you seriously. Make what you believe to be a fair offer and, like in any negotiation, be prepared to walk away!