4 Things to Know Prior to Negotiating a Home Purchase
As a real estate agent, you play a number of critical roles during the home buying process. You solicit new business, conduct open houses, and walk through your clients’ homes to better understand their preferences. But, perhaps the most important role, is your ability to negotiate the final price and conditions of a client’s home purchase.
In order to be ready when it comes time to negotiate a purchase, it’s critical that you and your client are properly prepared. Review the overall house hunting process with them before they begin viewing homes. Explain what they can expect in the current real estate market. Get an understanding of what they’re looking for and modify it as you show them available properties. Working through these four items upfront, even if some modifications are necessary during the purchase, will give you insight and keep your client calm through the roller coaster ride of negotiations.
Make sure your client is pre-approved with their lender before you even begin to look. Pre-approval gives your client the confidence to shop knowing they’re ready to make an offer when the right property appears. Pre-approval also sends a message to the seller that —should they accept your offer — there are only a couple of steps remaining before your client’s final mortgage loan approval.
2. Buyer’s Constraints
Just as a seller’s motivations are important to your negotiations, it’s equally important that you understand any constraints your client may have. Do they need to sell their current home before they can agree to close? Do they have money for a down payment? The last thing you want are any last minute contingencies that could deep-six the deal.
3. Price Range
Work with your client and their loan officer to determine a price range that everyone is comfortable with. A range gives you the kind of flexibility you need to make an offer and adjust if necessary depending on any changes in current market or the results of a detailed home inspection. Find out how willing your client would be to increase their offer should they find themselves in a bidding war. Knowing in advance allows you to move quickly.
As you view homes, work with your clients to develop a list of potential deal-breakers. These would be things that a client might want to include in a contract to protect themselves. Conditions speak to client’s risk tolerance. Work with them identify what they absolutely can’t live without. As a real estate agent, you know too many conditions will likely decrease the chances that you client’s offer will be accepted.
The Bottom Line
Negotiating is an exciting and stressful moment in the home buying process. Your clients are excited — they’ve found the home of their dreams and they are looking to you to make their offer the winning bid. This is particularly true in the current seller’s market where low inventory results in multiple competing offers. Much of the stress can be eliminated with proper planning and discussion upfront.