How to Negotiate a Better Deal on a Home

It’s not new news that in most U.S. cities it’s a buyer’s market in real estate. But even though buyers are very likely to get a great home purchase versus even just two years ago, there are a few simple steps they can take to get an even better deal. Smart Money suggests the following as steps to paying as little as possible:

  • Assess the seller’s situation
  • Research comparable homes
  • Find out how long the home’s been for sale
  • Request other financial incentives
  • Take a different tack with new construction

Sure, sellers can still rebuff a decent offer even if these steps are followed, but coming armed with the facts makes it much harder for them to do so. Furthermore, with so many similar properties on the market as competition, most sellers will be at the mercy of a well-educated buyer.

5 Ways to Negotiate a Better Deal on a Home [Smart Money]

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  1. RobinB says:

    Simple, but always good suggestions for home shoppers.

  2. Bladefist says:

    I just bought a house, I had my agent pull detail on the house. To be specific, she found what the house started list at, then each and every price drop, and everything.

  3. laserjobs says:

    Easiest way to save on purchasing anything, buy when others are not. Right now people are still frantic about real estate, I will wait until people say to me “why would you buy a house now?”.

  4. heavylee-again says:

    Good tips, but a good realtor should do some of these for you as a course of daily business. A realtor should pull comps to compare against the asking price of the home you want, and are easily able to see how many DOM (days on market) it has.

  5. HIV 2 Elway says:

    @Bladefist: What part of town are you in? I think the best way to get an honest deal on a house is simply not to rush. I looked for close to 9 months before buying my first house in Brookside.

  6. September-Air says:

    We are purchasing without agents and these tips are essential to getting a good deal. Especially the sellers situation, with the housing inventory moving really slow, some people HAVE to be out ASAP, and will do all they can to get it done. Who benefits? Moi!

  7. Elvisisdead says:

    @heavylee-again: Except for the fact that most realtors lack any incentive to help you get the best deal. They’re commissioned. They want you to take the easiest deal that you can get. They don’t care if you pay more if you close earlier. They just want the deal to go through.

    When buying a house, the only one that’s looking out for you is you. Tell the agent the data that you want. Comps broken down in $/sq ft. Days on the market. Original list price and any drops. Ask them to call the other agent to assess the seller’s situation. If they balk at any of this, get a new agent. Decide what you want fixed in the inspection, and bulldog it. Never let an agent talk you out of anything you want fixed. Never let them dictate the terms of the relationship. They only get paid if you close. Set your terms for close and work towards it.

  8. HIV 2 Elway says:

    @Elvisisdead: Exactly, I can’t think of a profession I trust less than realtors.

  9. Scoobatz says:

    These are fairly obvious tips, and one important one is still missing: terms. I purchased several homes in the past and found that motivated sellers want better terms than price. Generally, a lower offer with better terms (e.g. settlement date, lack of contigencies, etc.) is much better than purchase price alone.

  10. speedwell (propagandist and secular snarkist) says:

    @HIV 2 Elway: Commercial real estate brokers. Even the good ones are pigs.

  11. Juggernaut says:

    @Elvisisdead: And the fact that realtors created those artificially high prices (to max their commissions) in the first place.

  12. heavylee-again says:

    @Elvisisdead: I don’t disagree, but notice I said, “a good realtor…..”

  13. bohemian says:

    Something to remember when looking at new construction is that most places only state the finished square footage and finished number of bedrooms. So something with 1000 sq feet, 2 bedrooms, 2 bathrooms might also have another 1000 sq feet in the house that isn’t finished. This is a frequent practice with split level houses around here. When we were house hunting the second time around this realtor was showing us house after house that were tiny and near condemned yet in our price range and number of bedrooms.
    We finally fired her and found a new realtor. The new one pointed this out and showed us pages of new houses in our price range that just needed the lower level finished. A MUCH better situation than a shack in the hood.

  14. ARP says:

    @heavylee-again: True but Elvisisdead has a point that even YOUR realtor has a disincentive to get to you the best deal. The more the house sells for, the higher their commission. So even GOOD realtors, may not put forth the full effort they should. It’s not that you have to treat them like crap, but always have that in the back of your mind and if they start avoiding the types of research you ask for, get suspicious.

  15. dariasofi says:

    This is very good advice esp for people who are not planning on using a broker, but rather pay $400 to a real estate lawyer to review that paperwork & attend the closing.

  16. induscreed says:

    @HIV 2 Elway

    ” I can’t think of a profession I trust less than realtors”

    Car Dealers?

  17. Wormfather says:

    This is how you know realtors are scum…I’ve been approached a few times about becoming one, I’ve also been approached about being a car salesman.

    Yes, I’m an ass and that’s what scares me.

  18. ARP says:

    @dariasofi: It also depends on custom. In the Chicago area, you wouldn’t dream of doing a closing without an attorney present. But, I was surprised to hear that in many states, real estate attorneys rarely attend closings unless there are still problems, complext issues, etc. and often work in the background. Sometimes, the real estate agent ant mortgage broker handle much of the legal paperwork and attorneys do very little. So, look up what’s customary in your state/region and then you can better budget your closing costs.

  19. snidelywhiplash says:

    @Juggernaut: Hm. While real estate commissions are a part of a home’s sale price, it’s a bit difficult to support the assertion that realtors are responsible for driving up home prices, innit?

    Show me one realtor who sets market price for a home, and you’ll be showing me the first realtor to have done so.

    Far more likely culprits are the people who compose the market – buyers and sellers. Lump in idiots who decided to speculate on properties, and you have the vast majority of the blame for the housing bubble.

  20. snidelywhiplash says:

    @ARP: While realtors have an incentive to keep deals together and make sure they close, if they can do any math at all, sale price isn’t really that material. A typical agent’s take is 1.5-2% of the sale price. So even a $20,000 bump in sale price only works out to a $400 bump in commission for the agent. At most.

    Now, there are undoubtedly unethical scumbags out there who would allow someone else to be screwed over for $400, but I sure as hell ain’t one of them, nor are any of the realtors I’ve encountered in my time in this business.

    Now, lazy realtors…well, there are more than a few of those.

  21. sir_eccles says:

    Get a proper structural survey done.

    It’ll only cost a few hundred dollars but if you can take that survey back to the seller and say something like “there’s damp in the basement that we estimate will cost $X to fix, let’s negotiate” then you’re on to a winner.

  22. snidelywhiplash says:

    @bohemian:
    Something else to bear in mind when looking at comps is that generally, the above-grade square footage is the stuff that’s valuable. A finished basement is just that – a basement with drywall and carpet. It costs less to finish out, and usually has functional limitations (like lack of egress windows), so it’s worth less.

    For example, a 3BR/2BA split-entry in my area would have an above-grade value of ~$120/SF, while below-grade finish is valued at maybe $12/SF.

  23. SigmundTheSeaMonster says:

    @induscreed: kudos on Car Dealers !!! They just dress worse and lack the numbers in female versions compared to realtors.

  24. stacy75 says:

    “Realtors created those inflated prices”

    “even YOUR realtor has a disincentive to get to you the best deal. The more the house sells for, the higher their commission.”

    BWAH HA HA HA HA H! (inhale) HA HA HA HA HA!!

    I have no control over market prices.

    And as noted above, even a $25,000 increase in the price of a home only increases my commission by about $360 after my broker split & taxes. It’s only $750 before split/taxes, and I assure you it is professionally and financially a fucking idiotic idea to try to rush a buyer or push a buyer over $750.

    I love being a buyer’s agent, because the CR is paid by the *seller*. As a buyer’s agent, it is my fiduciary responsibility and I am ethically bound to negotiate the best possible deal for my buyer. I find it a point of personal pride when I can get the best deal for my clients- and plus, when I do a good job, my clients send me referrals and put out a good word, which is far better than a few extra bucks in one commission check.

    I’m sorry for anyone that’s had a bad experience with a Realtor- and if you’ve never used one, well, then shut yer trap. :-D

  25. smonkey says:

    You can and should always look out for yourself, but sometimes It’s nice to have someone in the business looking out for you who knows the ins and outs. I’ve used a Buyer’s broker in the past and it’s work out well for me.

  26. missdona says:

    @stacy75: My Realtor (buy side) totally shook down the seller side, and she was proud of herself for doing so. When my neighbor asked how much we paid for the condo and we told him, he said “you shoulda paid more” and my agent said “not with this agent”

  27. Bladefist says:

    @HIV 2 Elway: Parkville. I didnt have your luxury of time. I was living with terrible roommates who were causing great stress. I didn’t want to sign another year lease with an apartment.

    I had a buyers agent, that I knew through family, so he rip off was minimal, and she did a ton of research for me on the houses I liked, and ultimately led to me getting a great house with a great loan to value.

  28. Bladefist says:

    @Bladefist: I was down in brookside this weekend at the brooksider bar. I love that town, but too far from work North of the river.

  29. HIV 2 Elway says:

    @Bladefist: If you find yourself in the area again, drop me a line. Just sent you my contact info.

  30. formatc says:

    I’m in the market for a home myself, and I’m finding that the longer a house has been on the market, the less negotiable the price is. There’s plenty of other buyers out looking to low ball the list price and get a good deal in the wake of the meltdown, and I’ve had to pass on houses listed nearly a year because they were contractors with a nonnegotiable price so they could still make profit.

  31. paradisefound24 says:

    Redfin Redfin Redfin

    Seriously, guys, you don’t even need your agent to run numbers for you anymore. They’re all listed on Redfin, for FREE, and you can even see a couple decades back on what the house has sold for in the past.

    Spread the word about housing price transparency. We’ll get through the housing crash faster if we get it all done with at once.

  32. Alexander says:

    The internet has given the consumer so much power, even in real estate. Just about all that info can be found for free and quite easily. These websites are by no means the only ones or the best, but they provide a wealth of information on real estate:

    [www.redfin.com]

    [www.zillow.com]

    Here is a sample listing from redfin:

    [www.redfin.com]

    Look at all that info. From sales history to price changes to how many days it has been in the market. If your real estate agent is not giving you this information, get yourself a new one but still go out there and find the info yourself.

    Any other websites you guys recommend?

  33. Alexander says:

    @paradisefound24: Ha! Beat me to it! Redfin is a great great website. They don’t even have to be the listing agents, you can just put an MLS number in the search box and they’ll show you all the info. Another great one is [www.ziprealty.com] but they are a bit more slow.

  34. brennie says:

    And remember that a new(ish) tactic is to pull a house that has listed for over 30 days and ‘relist’ as though it were new on the market. I don’t know of a way to check for this yet except by keeping an eye on your neighborhood of choice.

  35. andrewlaughlin says:

    I am not sure where all of you guys found the real estate agents you have dealt with, but that isn’t the norm.

    I’m a full time agent and I just registered to make a comment. After seeing all your distrust with my profession it sorta erked me. Yes there are plenty of crooks, slime buckets, idiots, and careless agents. The vast majority are part time agents just looking to make some xtra cash, but the “good” ones as you guys put, it aren’t like that.

    We are governed by the government, state real estate boards, and even local Realtor membership boards. We are more vulnerable to being sued and losing our licenses than your used car dealer. So I can guarantee you that I do what is right by my client. I don’t want to lose my livelihood.

    You also need to realize that our business is based upon repeat buyers or most importantly, referrals. If we really did business like you guys say we do, then how would there be full time agents or guys producing all kinds of easy, great home sales with happy buyers?

    I treat my clients like I would be treated. I want them to like what I do and to know EVERYTHING that they can. I agree with translucent deals but those of you that have bought a home by yourself know it can be a lot of work. I can’t speak for all agents but I can tell you that the ones that are professional find a home that’s a good deal for their client. I don’t care about commission, in fact I don’t even think about it.

    I know my comment isn’t going to say opinions but hey I needed to defend my profession.

  36. Bladefist says:

    @HIV 2 Elway: Cool sounds good

  37. We shopped for 2+ years for a house, he and I both had certain criteria, and I did the research. We found the one we wanted, and got it. We were well prepared with a down payment, had a price range, and pre-approval in hand for better negotiating of the price. Got a great home inspector which helped us negotiate the price even more. For the most part, we did all the work, talked between ourselves, and just used the realtor to relay the messages. If you learn a lot of the steps yourself… you are better equipped! So…. DO THE RESEARCH. Like almost anything else, knowledge is your friend. Too many assholes & bitches in the world to trust people, the only person you can trust is YOURSELF.

  38. ideagirl says:

    @paradisefound24: redfin is great, but it only covers a few markets (seattle sf, boston, etc.) I live near sf, but redfin doesn’t cover my area at all.

  39. heavylee-again says:

    @ARP: True but Elvisisdead has a point that even YOUR realtor has a disincentive to get to you the best deal. The more the house sells for, the higher their commission. So even GOOD realtors, may not put forth the full effort they should. It’s not that you have to treat them like crap, but always have that in the back of your mind and if they start avoiding the types of research you ask for, get suspicious.

    Yes yes. I realize this. But this is not what a good realtor is. For me, a good realtor is someone who truly has my best interests in mind, and knows in return they will keep my business for this transaction, and earn my business and referals in the future.

    I understand that not many realtors work like this, but there aren’t that many good realtors.

  40. TangDrinker says:

    @brennie: it’s not that new. We did it several times in 2003 when it took us 13 months to sell our house in Raleigh.

    Also – you can sometimes find past history of a house (and neighboring sales) via the tax site of the county you’re interested in. It depends upon the county, but it’s a great way to figure out the value of the neighborhood and how much your tax bill may be. A decent buyers agent should be able to do this, too, but it’s always nice to be prepared before you ask the agent to show you 40 houses in 3 months.

    We’ve had a great buyer’s agent, and a not so great one. Talk to co-workers for suggestions. I would use one again, no question about it.

  41. mzs says:

    The county has all the records. You can see the mortgage(s) the seller has. Works great when you are buying in two situations:

    1. You are buying a place from someone that buys after a sherif’s warrant. You can see how much the person put down and how much he had to borrow and the terms on the loans. Some back of the envelope calculations on what the person put into prepping the place and that can help you with an educated offer. Personally I still would not buy from such a person because they really have a cut and run attitude to any repairs they did. Also these people tend to be greedy and see the stars for what they expect to make from the place. They tend to get a low apr for the first year loan, best to go after these towards the end.

    2. The sellers have already bought a new place and theirs is still not sold. Again you can do some back of the envelope calculations to see where they are at and come in with a low offer that still seems great for the seller. If you have a agent that is your friend they can tell you when the seller/agent contract is up and it is very appealing to show-up right after that as a buyer. They see all the fees that they can save selling ‘by owner.’