A qualified real estate agent can help you with negotiations.
Successful real estate negotiations can ensure you are able to purchase or sell a property for the best value each time. Although many real estate contracts only involve negotiations during the initial stages when a purchase and sales agreement is executed, you may continue negotiations after an appraisal comes in and even right up until final closing.
Contract Negotiations
Typically, once you find a home you like, the purchase process begins by making an offer on a piece of property. Your offer to purchase must be submitted in written form, and it should include your requested terms of sale. The purchase offer generally includes a price you are willing to pay, an approximate date you wish to close, and any specific buyer requests. Buyer requests may be the inclusion of specific furniture or personal items in the house, seller concessions to cover closing costs, or repairs and improvements you would like the seller to make prior to closing.
Real Estate Appraisals
A real estate appraisal is a formal report that assesses the value of a property. An appraisal report must be completed by a licensed professional, and it takes into account the size and features of a property as well as the recent sales price of comparable properties located within the same market. Real estate appraisals are commonly required by the bank whenever the buyer purchases a home with mortgage funds.
Negotiating After an Appraisal
If an appraisal comes back with a lower value than expected, it may give you increased negotiating power to amend the terms of your purchase contract. When you make an offer to purchase a home for $100,000, the expectation is that the property is worth at least that amount. Financial website, Sound Money Matters does not recommend paying more than the appraised value. Should the appraisal assess a lesser value due to current market conditions, you may be able to go back to the seller and negotiate a price reduction or additional repairs to keep in line with the appraised value of the property.
To Remember
Although you may find it worth your time to continue negotiations after a property appraisal comes in, take caution if you do decide to do so. In some cases, further negotiations may not be to your benefit. If the property appraisal comes back at a higher value than originally expected and you attempt to continue negotiating, the seller may exercise his rights to exit the purchase contract and sell to another buyer at a higher price.
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