10 Negotiating Tips for Home Buyers

The COVID-19 pandemic has sent mortgage rates plummeting, and that has a lot of people searching for that next place to call home. But the number of homes for sale across the U.S. actually hit a record low in September, which means the houses that are on the market are selling quickly and at a high cost.

So what can you do as a buyer to help your offer stand out from the pack? Here are 10 tips you can try.

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You probably already know what average home costs are in your area if you've been looking around, but if not, start doing so. You should also have some idea of whether it's a buyer's, seller's, or balanced market in your area.

This information is key to helping you understand how much negotiating power you have so you can make a competitive offer. In a seller's market, it's usually best to make your offers as clean and simple as possible. Don't ask for a ton of contingencies and don't get hung up on little things, like cosmetic issues. If you're asking for too much, the seller will likely move on to another potential buyer.

A real estate agent deals with buyers and sellers all the time, and they have a good sense of the market. They can help you narrow down your search by identifying homes that fit most of your criteria, and they can take what they know about the home, market, and seller to help you make your offer stand out.

Do some research online to see which real estate agents in your area have the best reputation, and meet with a few of them to decide which one you like the best.

A pre-approval letter tells the seller you're motivated and that you shouldn't run into any financial issues when it comes to closing on the home. These letters show that you have a mortgage lender willing to provide you the financing you need.

Getting pre-approved also takes a bit of shopping around because you want to find the mortgage lender that offers you the best rate. Apply with a few different financial institutions and compare their rates and closing costs, as well as how much they're willing to offer you. Try to get all of your applications in within about a month of one another so they only show up as a single hard inquiry on your credit report.

A seller's situation can also provide clues to how much room there is to negotiate and how you can make your offer more appealing. If the sellers have recently bought a new home or are planning on moving out of the area for work, they may be more motivated to sell than people who are just trying to capitalize on the high prices they think they can get for their home right now.

You should also look into how long the home has been on the market. If it's relatively new, you'll probably have to make a higher, more competitive offer. But if it's been on the market for months or even years, sellers could be willing to accept a lower price just to be rid of the house.

When negotiating a home sale, it's easy to get caught up in the numbers and forget that there are people involved. Including a personal letter explaining what you like about the home and how you envision your life there can help your offer stand out from others that just list a dollar amount and some contingencies. Some sellers may even be willing to accept a slightly lower offer if they feel a personal connection to you.

When writing your letter, focus on what makes the home special and leave out any negatives. Remember, the home likely has a lot of sentimental value to the seller, and they want to know the person buying it is going to appreciate it as much as they did.

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But with so many cards out there, you need to choose wisely. This top-rated card offers the ability to pay 0% interest on purchases until late 2021, has some of the most generous cash back rewards we’ve ever seen (up to 5%!), and somehow still sports a $0 annual fee.

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You may be able to make your offer more appealing to a seller by leaving out certain contingencies, but skipping the inspection contingency could leave you in financial trouble if there are major issues with the home that you're not aware of until it's too late.

Sellers may be a little less willing to negotiate minor repairs and cosmetic fixes when the market favors them, but if there's a serious issue with the home, chances are that's going to turn off other buyers as well, so you can use this to negotiate a lower cost.

Putting down earnest money is another way of showing the seller that you're serious about buying the home. Normally, you'd put down about 1% to 2% of the home's value, but if you have more cash to spare, it doesn't hurt to put down a little extra. This highlights your interest in the property and may grab the seller's attention.

Just make sure you're serious about the home before doing this. If you later change your mind and decide to walk away, the seller gets to keep your earnest money.

Sellers may choose your offer over others if you're willing to delay closing for a little longer to give them more time to move. This is especially true for sellers who are in the process of purchasing a new home themselves and may not be able to move out of their old home until they close on their new one.

Of course, you have to consider your own situation, too. If you need to be out of your own place by a certain time, you may need to close a little sooner. Just try to be as flexible as you can.

This shouldn't be a huge issue if you work with a real estate agent, but if you're not, take extra care that every offer you send to the sellers is complete and has all the information they need. If your offer is missing some important details, sellers are more likely to move on to the next one rather than follow up with you to fill in the blanks.

It can be hard to walk away from a home, especially one that checks all your boxes. But if the seller isn't willing to negotiate with you, sometimes it's better to move on. Before you make any offer on a home, know how much you can afford to spend and how much the home is worth to you.

Don't get so caught up in the bidding war that you overlook these limits. Buying a home is a big decision, and you can't take it lightly. There may not be a ton of homes on the market right now, but that will likely change over time, and you could find something better by waiting if there isn't anything that suits you right now.

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Every home negotiation is its own adventure, so these tips may get you further with some home sellers than others. But ultimately, you just have to strike the right balance between perseverance and patience. It takes time to work out the details of a home sale just as it takes time to find the right home in the first place, but if you stick with it and show the sellers that you're serious and willing to work with them, you'll likely have a deal before too long.