Know the market
One of the best things you can do for yourself as a home buyer is research the market you’re interested in.
Prices can vary wildly, depending on the desirability of the home, its condition and its location.
Even homes that are in the same city (or neighborhood) can vary wildly in price, so when researching the market pay close attention to the sales prices of those homes that are similar to the one you’re looking for.
Know the history
Gather as much information as you can from the public records about the history of the home.
Much if not all of this information can be found online. Look for the tax assessor and/or tax appraisers’ websites for the county where the home is located.
Was it recently purchased for more than the current list price? If so, why?
In a hot market where there are more homes than buyers, it could be an indication that the seller wants to profit from the market.
This means, however, that you’re likely going to pay top dollar for the home so you shouldn’t expect the home’s value to increase until the property market rises again.
Find a knowledgeable broker
Now that properties are listed online in a variety of places you can find homes yourself. While you might imagine this makes the need for a broker obsolete it’s not.
Now, the broker is responsible for understanding the marketplace well enough to help you make the strongest offer possible that will get you into the home you want to buy.
In other words, it’s your broker’s job to negotiate the best price rather than simply find your next home.
Be creative when needed
If you’re buying in a seller’s market – meaning there are more people looking for homes than there are homes available – you’ll need to get creative if you want your offer to be accepted.
One way to do this is to focus on other things besides the asking price.
For example, you could put down a higher deposit than is typical to indicate your strong intent to purchase. If the seller is in a hurry to sell they may be willing to accept your lower bid because you’ve shown you’re not just a “tire kicker”.
Or, if it’s possible on your end you could also offer a quick, 30 day closing to motivate the seller to agree to your offer.
Set yourself apart
Add a handwritten note with the offer to the seller describing how much you love the home and what it will mean to you and your family to live there.
For example, if it’s a historic home you could talk about how you intend to restore the home to its original splendor. By putting a name (and if you’re comfortable a face) to your offer can really help make your offer memorable and persuasive.
Use a house inspection
Any issues uncovered during the house inspection will be fodder for negotiations, however, this only works well if there are few offers on the property.
After the house is under contract the appraisal will be ordered by your lender. If the appraisal determines that the home value is equal to or more than the selling price the deal will go forward.
If, however, the listing price is higher than what the appraiser feels it is worth this can give you ammunition to negotiate a lower price, provided there aren’t a lot of other offers out there.
While the seller could wait for an all-cash buyer the fact that you’re ready and willing to buy is a strong motivator to make a deal.
Give yourself options
Try to keep emotion out of buying a home.
When you have several homes to choose from you’ll be more ready to say goodbye to a stubborn reluctant property owner and move on to the next property.
That said, it’s important to do some math to determine whether or not a counter-offer is a deal breaker.
For example, with an interest rate of 4.3 percent the payment difference between a mortgage of $195,000 and $199,000 amounts to less than $20 dollars per month.
Avoid thinking that the home’s value and the list price must match.
Your offer should be calculated on the home’s value, not what the seller is listing it for. If you do this, the odds of the appraisal coming in too low diminishes, which can help the home buying process go more smoothly.