The Role of Negotiation When Buying a House
The Role of Negotiation When Buying a House
Few people get to go through the process of buying a house and say that it was easy. That is because there are a lot of moving parts to buying a house and it is not easy to always know exactly what to do, when.
First-time home buyers will find this process especially hard. That is why to help make it go smoother, a buyer should learn more about how to properly make an offer and negotiate before starting the process.
Start With the Offer
The first step to making an offer is to find a house to make the offer on. This can be a long and tedious process. But once that is complete it is time to draw up an appropriate offer for the home. Remember, whatever is offered will need to be followed through on once accepted since it is a legally binding contract.
That is why buyers should never offer more for a house than can be obtained from a mortgage lender. A seller will expect the funds to be produced one way or another. A way to avoid running into financing problems is to become pre-approved for a mortgage before making an offer.
It also help to pay attention to who the market favors. There are some instances where the sellers have all the power and there are some instances where the buyers do. A buyer should not make low offers to a homeowner in a seller’s market. However, they may find sellers to be ready to negotiate in a buyer’s market.
When buying a house, an important factor for buyers to consider is the length of time the house has been on the market. A property that was just added to the market will likely have a homeowner that is not ready to negotiate. Meanwhile, a property that has been on the market for months may have a seller that is ready to accommodate a buyer.
When negotiating always consider the fact the homeowner may not make a counteroffer.
Adding in Conditions
If a legally binding offer is a scary concept, consider adding in some conditions. Conditional offers protect the buyer in the event that certain conditions are not met. There are a variety of conditions a buyer can place on an offer. Conditions are important to add in in the event something does go wrong.
One such condition surrounds financing. If a buyer cannot get the funds to purchase the house they are able to walk away without repercussions. Another may have to do with the home inspection. Upon receiving an unsatisfactory home inspection the buyer may choose to withdraw their offer.
Get to Know the Seller
The motivations of the seller are important when making an offer. Different circumstances for different sellers will make them more apt to negotiate or to stick to their asking price. Knowing why the seller is moving gives the buyer a huge advantage when drafting an offer.
Getting a Counteroffer
Once a buyer has given a homeowner an offer, the sellers have a chance to make a counteroffer. A counteroffer has to be responded to within three days, which means a buyer has to decide quickly. Homeowners have the right to withdraw a counteroffer any time before a buyer response, as well. Buyers should accept a counteroffer that is reasonable or make a counteroffer of their own.
Most counteroffers will be negotiations about price. However, in some instances, one party may want to move up the closing date or specify what appliances must stay in the home. Any detail that is not satisfactory to either party has to be dealt with before accepting the offer.
Rejection
Buyers may see their fair share of rejected offers. They can also reject counteroffers if they choose. If the homeowner is being unreasonable on any point that the buyer feels there is room for negotiation on, they can reject a counteroffer. Or a buyer may simply have found a better home to make an offer on.
Buyers have a responsibility to understand what an offer is before placing one on a house. An offer is a legally binding contract and should not be made without careful consideration. Once offers are accepted both parties much follow through unless there are conditions specified.