by Dino Alexander, NYS Licensed Real Estate Broker
If you haven't purchased a home before, or if you have and didn't bump into all six of these negotiations, you may have left money on the table. Too many homebuyers are fixated on the offer price for the home, but there are a number of opportunities to negotiate that can save you a ton of money. And, it's not just money on the deal. It can be money every month for years.
#1: The Offer Price
Everybody knows this one, and it gets the ball rolling. If you're working with a real estate agent, they will likely offer advice. They may tell you not to go too low, as you may be told to take a hike. But, you are the boss in this transaction. The best way to give yourself some leverage is to have a backup house that you're fine with buying if you blow the first deal.
#2: Counter Offers
If the seller takes your first offer, you'll be wondering why, or if you offered too much. There are some negotiations that go through multiple counteroffers. Some deals walk up by small jumps, with the buyer and the seller thinking they're tough negotiators and it's not a good deal unless they bounce numbers back and forth for a while.
#3: Contingencies
It's not all about money when you're buying a home. When you're checking out the listing, there may be notes like "hot tub not included," or "storage building not included." There can be any number of possessions that the seller may not want to leave. Counteroffers can be a little bit of money and some item(s). Asking for that hot tub can be a legitimate counteroffer, and the seller may come back with a yes, but at a higher selling price.
Sometimes the contingency isn't an item. Instead, it may be the closing date. A seller may want to stay in the home a little longer than the closing date you want for move-in. Negotiations can bounce back and forth with the price moving up and down based on other contingencies.
#4: Repairs
When the home inspection is finished, you receive the inspection report. There may be repairs that you want the seller to do before closing. Or, you may ask for money to do the repairs after closing. This is often better, as the seller will want to get them done as cheaply as possible. You will be more concerned with having them done right.
Here's a warning about repair negotiations: if you are congratulating yourself on beating the seller with a lowball selling price, don't expect to get much or any consideration if you want repairs. At that point, the seller has already been locked into the selling price, and they may not have any more room to bargain. Even if they do, they may be a little upset about that low purchase price after thinking about it for a while.
#5: Mortgage Terms
The mortgage terms are the negotiation that will be with you for a long time. Often it's more shopping than negotiating, but you never know until you ask. Sure, the bank, lender, or mortgage broker will give you a rate quote, points, costs, etc. Usually, you are working with a mortgage broker, so whatever they show you, ask for something better.
They are getting a fee from the lender they are taking you to, and they may be able to cut that fee to keep from losing your business. At the very least, negotiating with them can get them to shop your loan to other lenders, as they work with more than one.
#6: Insurance
Get quotes from different insurance companies or, if you're working with a broker, get them to shop your policy for the best deal. Be careful, though, as you don't want a better price if they've knocked out some of the coverage you really need.
There you have the six points in a home purchase where negotiating can save you money. Working at each of them can save you thousands upfront and tens of thousands over the years you own the home.