The Actual Negotiatons
As to the actual negotiations, most people will expect you to bargain, so do not be afraid to offer less than the asking price. Be careful, though. An offer that is too low may make the seller mad and kill any chance to reach a compromise, especially when the seller has made previous reductions in the price, or is asking less than what was paid for the home.
Normally, somewhere between 85 and 90 percent of the asking price usually is a good first offer on a used home. On a newly-built home, I usually start a little over 90 percent of the builder's asking price, because builders generally do not have as much room to negotiate.
For instance, if the seller of a used home is asking $100,000, the taking price is probably in the low to mid 90s, so make an offer in the mid 80s. Then increase the amount of your offers to a predetermined target price, $93,000, above which you will not go. If it's a newly-built home, start at $91,000, planning to go as high as $96,000.
You might also decide to give up some of the provisions in your offer to which the seller has strong objections. Each thing you give up, though, should be matched by a concession in price, terms, and so on by the seller. Let the seller know he or she is buying the protection that you are giving up.
During a slow market, or if there isn't a threat of a competing buyer, a good technique is to never accept the seller's offer, even it is at a price the buyer will ultimately pay.
Suppose you offer $74,000 on an $82,500 home and the seller counters $78,000, a price you will pay. If you accept the $78,000, you have the lost the opportunity to get the home for $76,000 or $77,000. So make another offer at $76,000 and wait.
Unless there is a competing buyer, there is little risk in doing this, because the seller isn't going anywhere. On the other hand, your money is very portable, and the seller may be getting worried about you tiring of the game. You can also use this technique to negotiate the amount and terms of any paper the seller might hold, what appliances will go with the home, and so on...
Normally, somewhere between 85 and 90 percent of the asking price usually is a good first offer on a used home. On a newly-built home, I usually start a little over 90 percent of the builder's asking price, because builders generally do not have as much room to negotiate.
For instance, if the seller of a used home is asking $100,000, the taking price is probably in the low to mid 90s, so make an offer in the mid 80s. Then increase the amount of your offers to a predetermined target price, $93,000, above which you will not go. If it's a newly-built home, start at $91,000, planning to go as high as $96,000.
You might also decide to give up some of the provisions in your offer to which the seller has strong objections. Each thing you give up, though, should be matched by a concession in price, terms, and so on by the seller. Let the seller know he or she is buying the protection that you are giving up.
During a slow market, or if there isn't a threat of a competing buyer, a good technique is to never accept the seller's offer, even it is at a price the buyer will ultimately pay.
Suppose you offer $74,000 on an $82,500 home and the seller counters $78,000, a price you will pay. If you accept the $78,000, you have the lost the opportunity to get the home for $76,000 or $77,000. So make another offer at $76,000 and wait.
Unless there is a competing buyer, there is little risk in doing this, because the seller isn't going anywhere. On the other hand, your money is very portable, and the seller may be getting worried about you tiring of the game. You can also use this technique to negotiate the amount and terms of any paper the seller might hold, what appliances will go with the home, and so on...
posted by MadBrook, Inc. at 5:33 PM
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