Dealing With Counter-Offers When Buying a Home
When buying a home, you might have to deal with a counter-offer from the homeowner / seller. These back-and-forth negotiations are a normal part of the home buying process. But you need to be prepared for them. This article explains how to handle offers and counter-offers when buying a house.
Three Possible Outcomes of Your Initial Offer
There are three possible scenarios when negotiating the price of a house. When you submit your initial offer, the seller will likely do one of the following:
1. Accept your offer with no other conditions or changes.
2. Make a counter-offer by changing certain terms like the purchase price or closing date.
3. Reject your offer entirely, without making a counter of any kind.
First-time home buyers often believe that the seller is obligated to make a counter-offer, at the very least. But that's not the case. A homeowner can simply turn you down with no explanation, if they choose to. So keep this in mind as you try to negotiate the price.
Most sellers will either take option #1 or option #2. They'll either accept the initial offer as it's written, or sign a counter-offer back to you. After all, these are the only two ways to move the process forward.
Finding Common Ground
If the seller makes a counter-offer, it will probably be based on the price. If they counter with the original asking price, they are basically saying: “We are not willing to negotiate the house price with you.” If they counter with an amount that falls somewhere between the original list price and the amount you offered, it means they are willing to negotiate. They are trying to find middle ground.
What you do next will largely depend on two things:
* The type of real estate market you're in
* How much you want the house
Before you start negotiating the house price with a seller, you need to have a maximum amount in mind. This is the amount you are willing to spend on this particular home. This number will be limited by your housing budget and your pre-approval amount (if you're using a mortgage loan). But it's also limited by the current market value of the house. After all, you don't want to pay more for a home than it's currently worth.
Support Your Offer With Data
Here's another important negotiating tip. When you submit your offer to the seller, tell them why you are offering that amount. Your agent can convey this information to the listing agent, or directly to the homeowners. You don't want the sellers to think you've pulled this number out of thin air. You'll have a better chance of getting your offer accepted if you justify the amount. You can justify it by providing recent sales data that supports your offer amount.
Example: “We are offering $275,000 for this house based on the comparable sales data attached. We realize that this home has a larger lot and several interior upgrades, so we have offered an amount that is above the comparable sales to compensate for these factors. We feel this is a reasonable offer in the current market.”
Your agent can put this kind of statement on paper and submit it with your offer. If you've made a reasonable offer for the house, the listing agent would be wise to convince the sellers of this.
Of course, some people are simply unwilling to negotiate. If you encounter a home you feel is overpriced (based on comparable sales data), and the sellers refuse to come down in their asking price, it might be time to move on to the next house.
Article courtesy of BlogStream content service.