real estate negotiating tips

How To Negotiate a House Price 30 Tips for Buyers and Sellers

How Much Can You Bargain on Home Price When Negotiating a House Purchase?

Anywhere from zero percent to fifty percent. But realistically, you can’t negotiate home price very much. The home’s sale price should be bound to the market and the market decides the price to within a couple of percentage points. Consider the selling agent’s position. Would they take on a listing where the house price is dramatically out of sync with reality? That would be a full on waste of their time, money, and effort. Make a deal, but don’t expect Black Friday-type discounts.

A Real Estate Agent Can Help You Bargain the Best Deal

At minimum, an agent (by definition) represents you in the deal which means you won’t be negotiating with the other party directly. Nothing good can come of buyer and seller going toe to toe at the kitchen table.

Negotiating the price of a house is a critical aspect of the home-buying process. Here are 30 tips and tricks that incorporate general negotiation strategies and specific advice for real estate transactions.

1. Understand the Market

This information can greatly influence your negotiation strategy. Before negotiating, gather information about the property, market conditions, and the seller’s situation. Is it a buyer’s or seller’s market? If you’re buying and it is a buyer’s market, negotiations can be fun. But you must always be ready to bargain in good faith. Any other approach could offend the seller, who is already on edge from being in a weaker negotiating position because of the market’s softness. Knowing details like the property’s time on the market and comparable sales can strengthen your position.

If you have done your research and know what the home is worth, the asking price should be easy to negotiate. Home buyers should not expect to be able to bargain much below the fair market value and home sellers should expect the same in the opposite direction.

2. Get a Trusted Real Estate Agent

A skilled real estate agent is crucial in negotiating. They have experience and knowledge about what works in negotiations and can represent your interests effectively. Ask your real estate agent how far they think the opposing party might go on price or other stipulations.

3. Start with a Reasonable Offer

Your initial offer should be reasonable and justifiable. An offer too low below asking price might offend the seller, while a high offer may lead to overpaying. Trying to reach agreement with someone who is offended by your first offer is going to be difficult. If you make an offer 40% below market, you might find yourself in a place where the seller refuses to bargain further. How to negotiate on a house? Buyer or seller, be reasonable.

4. Use Home Inspection Reports

Use the home inspection report to your advantage. If the inspection reveals significant issues, you can ask for a lower price or ask the seller to make repairs. Some regions actually have forms and an official process to negotiate price changes based on the contents of the inspection report. If the home inspection reveals plumbing issues that will kill the deal, don’t just walk away. Ask the seller to resolve those issues to keep the deal alive.

5. Don’t Show Too Much Emotion

While you may love the house, showing too much eagerness can weaken your negotiating position. Keep a neutral demeanor. This is where your real estate agent comes in. Home buying is emotional. If you want to negotiate house price, you need to be calm, cool, and collected.

6. Be Ready to Compromise

Negotiation is a two-way process. Be prepared to meet the seller halfway, whether it’s on property cost, closing costs, or other terms. Think beyond the dollars. Offer to move the close date up 30 days if the seller comes down $10,000. Tell the buyers you will include the piano in the contract if they waive the financing contingency.

7. Understand the Seller’s Motivation

Knowing why the seller is moving can provide valuable insights. A seller in a hurry to move might be more open to negotiation. Find out if the seller has to sell the home in question and why. Be sensitive to their plight in discussions, but it could be a way to get a lower offer accepted.

8. Build Rapport with the Opposition

Establishing a connection with negotiators can make the negotiation process smoother. Small gestures of goodwill can go a long way in creating a positive atmosphere.

9. How Do You Negotiate a House Price? Listen More Than You Speak

Effective negotiators spend more time listening than talking. Understanding your counterpart’s motivations can provide valuable insights into how to structure your offer. This.

10. Be Assertive but Respectful

Assertiveness in negotiation means clearly stating what you want while respecting the other party’s interests. It’s about being firm yet fair.

11. Understand Your BATNA

Know your Best Alternative to a Negotiated Agreement (BATNA). Having a strong alternative deal can give you more confidence and leverage in negotiations. It might be a different “backup” property to purchase or if you are the seller, it might be a buyer with a different offer and a new opportunity to bargain with someone else. If your opponent and even you know that this is the only deal available, the desperation might show on your face.

12. Don’t Rush

Take your time with the negotiation. Rushing can lead to mistakes or oversights. Patience can also be a strategic tool in getting a better deal. Sometimes the real estate market can give you time to plan your actions. Negotiating power often finds those who have the mental stamina to wait for it to reveal itself.

13. Use Silence Effectively

Silence can be a powerful tool in negotiations. It gives you time to think and can prompt the seller to reveal more information or make concessions. How to negotiate a home price? When in doubt, say nothing rather than something you might regret. Saying nothing gives the other side space to make a mistake.

14. Don’t Make Assumptions

Avoid assuming anything about the seller’s position or motivations. Ask questions and seek clarity on any points that are not clear. Information gathering is a vital part of the negotiation. Some negotiators actually drop ingeniously and intentionally incorrect statements just to stir things up. Cost too high? Maybe say “we know you have plenty of time to wait on the right buyer, but we are on a more accelerated timeline.” That might cause the other side to blurt out “no, that’s not right, our new house closes in 41 days.” Information will help you succeed. So go get it.

15. Be Ready to Walk Away From The Negotiation

If the negotiation isn’t aligning with your needs and limits, be prepared to walk away. This demonstrates that you are not desperate and can often lead to better offers.

You need to set a “walkaway price” before the negotiations begin. Some people write it on a sticky note and put it in their pocket. If the opposition doesn’t meet your “walkaway”, established prior to the negotiation, you walk away. The sticky note acts as a touchstone to ground you. When negotiating the purchase there will be many emotions clouding your judgement.

Eliminate making a bad decision in the midst of it by disconnecting the emotions entirely. You do what the sticky note says and nothing else. No amount of cajoling or convincing can change that number pre-written on the paper. It is black and white. “You’re not going to get a better offer than this” or “you have to be realistic” or “this is probably the only offer you’re going to get” or other bullying tactics should not move you from your walkaway price. Be confident and take a deep breath. Go slow.

The walkaway is the number at which you would be happier to leave the negotiation than to stay. If both parties agreed to a deal where you paid X for the property, which is your walkaway and maximum number, then you will be happy with the transaction. If the seller demands a number above this walkaway price, then you will regret buying and will be happier just walking away.

16. Focus on the Seller’s Pressures

Understanding the pressures and challenges the seller faces can give you an advantage. Use this knowledge to bargain terms that are favorable to you. It takes research to figure this out.

Realistically this research is hardly cloak and dagger. It is more about the relationship between the buyer agent and the seller agent and informal words and gestures between them. An eye raise, a subtle nod can tip off the other agent as to their client’s intentions. Is this fair or okay or legal? Probably not, but it is done on virtually every deal.

Why would my agent give away information that could weaken my position at the negotiation table? Ultimately, just about every answer to tough questions comes down to money. And this is no different. Both agents make money only when the deal goes through. So be careful and understand your agent’s position. If a deal is anywhere close and your agent has enough information on your limits and the opposition’s position and they see a deal to be made, they’ll push you to make that deal.

Is that wrong? Legal mediations between two parties is remarkably similar. The mediator who is paid simply to facilitate communications between parties and who generally cannot issue verdicts or orders or judgements, frequently nudges either side toward an agreement that their inside information allows them to recognize. Is that what agents are doing? Your call, but being aware of the sometimes conflicting roles that agents play is important.

17. Look for Trade-offs

Negotiations can also include terms other than dollars, such as closing date, repairs, or what’s included in the purchase. Identify what the seller values that may cost you little to give, and vice versa. This can lead to mutually beneficial trade-offs.

These can take the form of extended or accelerated closing dates, inclusion or exclusion of appliances or furniture or fittings, or dropping of or adding of conditions to the agreement to satisfy a concern. Contingencies can be a great place to cooperate. Or maybe the house needs a new roof and the buyer could ask the seller to pay for it. Or maybe half of it by reducing half of the replacement cost from the cost of the property.

18. Avoid Over-Negotiating

If you have the upper hand, be careful not to push too hard. Over-negotiating can sour relations and may impact future interactions. Silence is golden. Negotiating a home purchase can be as much about what you don’t say as what you do say.

19. When You Negotiate Home Price, Don’t Take Things Personally

Keep emotions in check and don’t take negotiation tactics personally. Focus on the transaction and the end goal.

20. Understand the Seller’s Needs

Try to understand the deal from the seller’s perspective. Showing empathy and offering solutions that meet their needs can make negotiations smoother.

21. Don’t Give Away Anything for Free

Avoid making unilateral concessions. If you give something, make sure you get something in return. Don’t negotiate against yourself. If you can’t move the home price, get concessions on something else.

22. Use Contingent Contracts

Consider using contingent contracts to deal with uncertainties. This can involve penalties or rewards based on future events. Standard contingencies include things like home inspection results and financing, but you could be creative if that helps both parties agree.

23. Plan for the Long Term

Incorporate milestones and deadlines in your agreement to ensure commitments are met. These are standard in all home purchase agreements, but they can be an item where you can bargain.

24. Reframe Anxiety as Excitedness

Treat the physiological arousal associated with negotiation anxiety as excitement. Put on a happy face. This perspective can improve your performance and might help you deal for the best price on a property.

25. Anchor with a Draft Agreement

Begin negotiations with a draft agreement. This sets the anchor for the discussion and can streamline the process.

Implementing these strategies can enhance your ability to barter effectively, leading to a successful and satisfying home purchase. Remember, negotiation is an art that balances assertiveness, empathy, strategy, and patience. If you walk away with only one lesson on how to negotiate a house price, it should be to use patience.

26. Or Don’t Set an Anchor at All

Some advanced negotiators refuse to make the first offer. Instead they sit back and listen. They are listening for any new information buried in the words or offer of the opposition. They are hunting for weakness or desires or intentions that they can leverage in negotiations.

The seller may begin with an offer below their original ask that is already below your walkaway. Now you’re negotiating from a position of strength. Make an offer 4% below theirs and see how they react. Or sit back and do some more listening. Don’t react positively or negatively to any new information or number. Now you know that you are going to close the deal, the question is just about how far you’ll be from the list number when you do it.

27. As a Seller, Don’t Rush Your Counter Offer

Give yourself a bit of time to digest it. Give the buyer some time to sweat. Keep in mind that the buyer is putting in an offer on a home. You don’t do that unless you have undeniable interest. You know they want your home. That doesn’t mean they want it at the seller’s asking price. But it does mean that they’re incredibly committed emotionally to this home buying process. Give them time to consider the risk of blowing up the deal with their next move. Give them time to build a plan for their new home in their head while waiting for your response. They might be more amenable to your counter offer if given time to believe that the deal could go away.

28. As a Buyer, Don’t Negotiate House Price While Anxious

You have to be clear headed and emotionless. You want to buy a home, but it doesn’t have to be this home. That’s your mantra. Don’t pre-move in your furniture. Don’t negotiate while distracted by babies or work or dogs or at a party. The process deserves your full attention.

The seller’s agent wants this deal to go through. The seller wants the deal to go through. You have to give the process time and patience and you’ll need nerves of steel to get a significant discount. There is no need to be anxious if you have information you can rely on. If the seller chooses to reject the offer, so be it. Make another offer. Are they likely to offer some kind of concession with each counter-offer? They want this place sold, so if you haven’t offended them by being reasonable, yes they will likely give you something.

If the price of the home at this point is reasonable and you have decided that you have to buy the home, then the decision is made. There is no need to be anxious. Is there still room to negotiate? Maybe. But don’t rush it and don’t put in a low offer that spikes the deal.

29. The Purchase Price is Not Influenced by the Mortgage You Pre-Qualify For

Try to keep in mind that asking for unreasonable concessions is not negotiating in good faith. You can quickly poison the deal by trying to negotiate house price with the seller when you reference your mortgage limitations. Narcissism will get you nowhere. Don’t expect a counter offer.

30. If the Home Buying or Selling is Being Done By Partners, Agree to Terms BEFORE Negotiations Begin

Whew. Last but not least, be smart about this whole emotional rollercoaster. Home buying is incredibly stressful. Your dream home, the giant home loan, the inspection report, waiting on the counter offer, trying to get the best price – all of these are triggers. Keep your emotions in check and go easy on your partner. Before things get tense, you need to get on the same page. Big ones are location, budget, priorities. Figure them out and write them down.

One way to approach easily anticipatable stressors is to pre-plan your response for when they happen. Don’t get caught by surprise. And buying a home is stressful. Hey, if this particular home deal falls apart, let it go and move on. Your relationship is worth way more than a replaceable property.