Closing costs may also be negotiated when buying a house.
While there are no rules set in stone about what to offer on a house for sale, there are key factors to consider in negotiating the best price, including market conditions (buyer or seller market), the location of the house, and the condition of the house. A real estate agent can help you decide what to offer.
Market
If your area's housing market favors the seller, you'll have less room to negotiate; however, according to Bank Rate financial adviser Steve McLinden, sellers' markets are rare. In a buyers' market, you have the upper hand in the negotiations because there are more houses and less competition. However, just because you're in a buyers' market doesn't mean that you should make an extremely lowball offer -- if you really want the house. The seller may be offended and reject it right away.
Location
The location of the property has a huge impact on the sale price. If the home you're interested in is in a desirable neighborhood with good schools nearby, you'll have a harder time negotiating a low price; however, it's keep in mind that you'll benefit from the location as well. Your realtor should provide you with a list of comparable homes that sold recently in the neighborhood. Weigh those prices. Also consider comparable homes that are for sale. Factor in those prices.
Condition
The condition of the house is a key factor. When you walk through the house, take note of anything that needs repair or is badly in need of an update. These will cost money down the road, and you may be able to work them into your price negotiation. For example, if the kitchen was last updated in the 1950s, it can't sell for the same price as a home of the same size, in the same neighborhood, with a newly updated kitchen. Once you decide to make an offer and it's accepted, hire a home inspector to check for any other issues beneath the surface that might cost you money. If the inspector finds significant problems, you can negotiate a lower price or ask the seller to pay for the repairs. Bank Rate says, "The seller's willingness to repair any problems uncovered by the inspector will determine whether you should seek additional price adjustments."
Timing
If a home has been sitting on the market for a long time, the owner is more likely to sell at a lower price. Your agent may have information on the homeowner's situation, which will assist you in your negotiations. For example, if the seller has already moved into another property, he is paying taxes, utilities and mortgage payments on two homes, and he'll take further losses if the house remains on the market -- in this situation, you have even more negotiating clout.
Tags: Bank Rate, buyers market, comparable homes, comparable homes that, condition house, cost money
