Eight Tips for Negotiating Property Prices

Meta Description: As with nearly any private transaction, you could negotiate a property’s final price. Learn eight ways to get a great deal as a homebuyer.

When buying a property, your negotiations could massively change the final price. With the right techniques, you’ll end up with a purchase agreement you can be proud of. In this blog post, we’ll share eight tips for getting a better deal on a property.

1. Table of Contents

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   Carry Out Market Research

If you already have your eye on a property, compare its price with recent local real estate sales. Limit this to properties of a similar size and age, if possible. You might find the property is above market rate for no clear reason.

In this situation, don’t be afraid to mention this to the owner. Ask them directly why the property has such a high price. They might actually be able to justify this. If not, show them your findings and discuss a lower price.

2. Get a Pre-Approved Loan Offer

A pre-approval shows you how much you can borrow upfront. This gives you a clear budget. It’ll also show sellers that you’re a serious buyer. They’ll see that you have a good credit score and will be able to afford the final sale.

Pre-approvals usually come with a 60 or 90-day expiration date. This gives your offer an added level of urgency. The seller might want to close the sale quickly. For even stronger backing, you could try to secure a mortgage commitment letter.

3. Look for Motivated Sellers

Some sellers want to get rid of a property quite quickly. They might need this money to facilitate their next major purchase, for example. In these instances, they’ll be more open to negotiations. Any property on the market for months will likely have a motivated seller.

Find properties that have had several price cuts, are already empty, or are only available “as-is.” If the pressure is severe enough, they might even be a distressed seller. These are people who need to sell as soon as possible.

4. Be Strategic With Your Offer

Your first offer shouldn’t be the highest you’re willing to go. This is, arguably, the golden rule of negotiation. Go slightly below your preferred price, but don’t lowball. They might reject you as a serious buyer right away if you do this.

Your goal here is to get a counteroffer that works in your favor. However, there’s no guarantee of it being significantly lower than their initial asking price. Your ability to close the sale quickly can again be enough to sweeten the deal.

5. Arrange a Property Condition Assessment

When you view the property, point out any flaws that you believe should lower the price. It may even be worth commissioning a property condition assessment. This can highlight near-invisible defects. For example, the inspector might spot faulty wiring that even the seller didn’t notice.

You can use the assessment results as a source of leverage. If there are any major faults, you can ask the seller to cover repair costs. Alternatively, you might decide to take the property as-is for a lower overall price.

6. Keep Your Emotions in Check

You should make it clear that you want the property. However, you still shouldn’t show too much enthusiasm. The seller could then stand firm on their asking price, confident that you’ll pay it. It’s also healthy to stay objective when making decisions.

In addition, you can’t be too aggressive in your negotiations. This is the case even when there is clear evidence that the property should be cheaper. If you find a fault with the property, you must discuss this calmly and politely.

7. Know When To Walk Away

Similarly, you have to be ready to abandon the sale when necessary. If the negotiations stall, the only alternative is agreeing to a price you’re not happy with. This might even pressure the seller to reconsider their approach or current price.

This should only be a last resort. If you leave and come back, you won’t be in a good position to negotiate. Make sure you also look at other properties. This means you won’t be back to square one if this property doesn’t work out.

8. Add Contingencies to Your Agreement

Any major sale is a risk for both the buyer and seller. You can put your seller at ease by using a purchase agreement template that comes with contingencies. For example, it might set out how to arbitrate a dispute if the sale falls through.

You could even include an escrow release clause. This lets the seller access a part of your final payment at an earlier date. When they might need the money urgently, this could convince them to accept a lower overall price.

Conclusion

No matter a property’s asking price, the actual final sum isn’t set in stone. With the right tactics and the right documents, you can show yourself as a serious buyer. This gives you the space to challenge seemingly unfair prices.