Buying a first home is a major milestone for anyone. And getting the best value on your home purchase is a must, now more than ever. While you may rely on your real estate agent to haggle on your behalf, learning how to negotiate successfully is a skill that’s worth learning – for the task at hand and for business dealings in the future. Here’s how to cut the best deals when buying a home.
- Keep emotions in check
- Do the prep work
Knowing that your documents and finances are in order before you start your home buying journey puts you at an advantage. Even if the median down payment of homes in the US was 13.3% during the first quarter of 2022, according to the survey results of the National Association of Realtors (NAR), it’s wiser to pay the traditional 20% down. Opting for a higher down payment enables you to ask lenders for more favorable interest rates, saving you thousands over the lifetime of your mortgage.
- Take advantage of market trends
Understanding market trends allows you to make better informed decisions. One of the things to check is whether the property is in a buyer’s market or the seller’s market. A buyer’s market puts you at a distinct advantage during negotiations because there are usually more homes than there are buyers. Thus, sellers will be cutting better deals to entice buyers to choose their property.
- Inspect the property
Before making the final offer, check the property for needed repairs or renovations. Negotiate fixes with the seller. Some sellers may opt to fix the property themselves to hold on to their asking price or counteroffer. Others would rather sell as is, prefering to adjust their asking price to allow the new owner to take care of the repair themselves. Don’t forget that last minute repairs cost not just money but also time.
- Maintain a healthy credit score
With a good credit score, the buyer can receive a better mortgage rate, allowing you to negotiate with confidence. To bring your credit score up to par, ensure credit card debt is paid on time, your debt-to-credit ratio is low, car loans are paid for, and errors you spot in your credit report are promptly disputed.
- Offer a larger down payment
When purchasing a first home, agreeing to a larger down tells the seller that the deal is likely to push through because your loan is likely to be approved. This is also a good way to decrease your monthly payments and save money in the long run.
- Negotiate closing costs
While buyers usually cover closing costs (appraisal fees, title searches, title insurance, taxes, and so on, or 3% to 6% of the price of the home), you can ask the seller to pay for part, if not all, of the costs. You’ll need to read the seller and/or the market in order to achieve this. Is the seller anxious to complete the deal? Or are there other buyers waiting in the wings? Consult your real estate agent before making a move.
- Learn more about the seller
Why are they moving? Is there a job waiting elsewhere? Have they just bought a new house and don’t want to be saddled with two mortgages? The more you know about the seller, the better you will be at negotiating a better price. - Tell your story
When you write your offer letter, tell the seller your story. Are you buying the seller’s home because you want to raise your family in a home they can grow into in the years to come? Are you drawn by the neighborhood, the schools, or the backyard where you foresee entertaining friends and family? Such personal details are likely to resonate with sellers who are, themselves, going through an emotional time especially if they’re selling their family home. Establishing a connection means opening the door to negotiations.
- Assess comparable homes in the neighborhood
Ask your agent about comparable homes (comp) in the neighborhood. How does the house you’re interested in stack up against other such homes in the neighborhood? Look for some wiggle room for negotiation – a comp that’s larger but cheaper, in better condition, etc.
It’s easy to get excited and overwhelmed when buying one’s first home and emotions can get the better of you. Remaining calm at crucial times during the buying process puts you in a better position to clearly see the pros and cons of the purchase. By regulating emotions, the buyer can also avoid making impulsive decisions that they might regret later.
With these factors in mind, first-time home buyers can be more confident in negotiating the best deal for the property they have in mind. This ensures that they can keep their finances healthy and make competitive offers, while making sure the deal is fair to all in the end.
It is also recommended for first-time buyers to work with experts like Palm Beach Gardens real estate agents to help them in the process. For first-time home buyers looking for houses for sale in Palm Beach Gardens, FL, the Telchin Group, LLC provides expert real estate guidance. They can point you toward the best real estate in Ibis and the rest of Palm Beach County. Just call 561.301.0249 or send an email here.