Buying a home is one of the largest investments you will ever make in your lifetime. You’re a first-time homebuyer, seasoned real estate investor, or business owner who is relocating for work. Whatever it is, negotiating can save you thousands of dollars and enable you to get the home of your dreams. So how do you do it? The following is a step-by-step guide on how to negotiate like a pro when buying a home.

Learning the Art of Negotiation

Negotiation is not actually haggling over a price—it’s learning about the market, rapport-building, and negotiating win-win for buyer and seller. To succeed, you need to prepare, research, and communicate.

Reminders before negotiation:

  • Know your numbers. Know your budget, the pre-approved loan you have, and any other costs (closing costs, inspections, or repairs).
  • Research the local market. Understanding whether it’s a buyer’s or seller’s market can shape your entire approach. Check for trends in your area through reputable sources like Zillow or Redfin.
  • Establish non-negotiables. Know what you’re willing to compromise on (e.g., closing dates or repairs) and what’s essential (e.g., location or price).

Step 1: Do Your Homework

Do your homework before you make an offer on a buy. The more you know, the better your negotiating position.

Research Comparable Sales.

Ask your real estate agent to provide you with comparable property data (also referred to as “comps”) to establish the fair market value of the house. Comps take into account the selling price of similar houses in the area so that you will know if the asking price is reasonable or not.

Discover Information about the Seller.

Why are they selling? Do they have a need for a fast close? Being aware of their motivations can provide negotiating leverage. For instance, if the seller is moving for employment and is under a deadline, they may be open to a lower price.

Hire a Professional to Inspect.

Raising legitimate issues revealed in an inspection—not merely cosmetic—can help bolster your argument for requesting repairs or a price reduction.

Step 2: Make a Strong First Offer

You only have one opportunity to make a first impression, or so they claim, and in real estate, it never rings more true. Developing a genuine but aggressive offer positions you to drive the negotiation.

Here is how to structure an offer that will get taken seriously:

  • Keep calm and don’t let emotion get the better of. Make level-headed decisions and don’t overspend price-wise, as much as you’ll love the place.
  • Make a terms offer rather than a price offer. Rare cases it’s not all about bucks. Sellers may be willing to accept flexible closings or waived contingencies (if you can handle it, that is).
  • Be prepared for rejection. Don’t take a cavalier “no” personally—often it is simply the opening negotiating position.

Step 3: Negotiate Confidently

Once your offer is on the table, negotiating really starts. This is where your negotiation skills come into play.

Use Anchoring Effectively.

The initial offer tends to act as an “anchor,” establishing the trend for the rest of the discussions. Anchoring too low can deter the seller, while anchoring too high restricts your scope for negotiation. Find a reasonable balance.

Be Persistent But Firm.

There will be a bit of give and take. Negotiate strongly but tactfully on your own behalf. If, say, inspection reveals a defect in the roof, you can request repair or price adjustment.

Think Escalation Clauses.

In very competitive residential markets, an escalation clause is worth its weight in gold. It will automatically increase your bid by small steps if someone else bids more, and this will keep you in the race.

Step 4: Work Repairs and Contingencies to Your Advantage

Home inspections provide you with a wonderful negotiating advantage at the negotiating table. If you do happen to discover defects, you can:

  • Request that the seller complete the repair before closing.
  • Ask for a concession, lowering the price of the home to cover the cost of the repair.
  • Negotiate a credit at closing that will take care of further work that you’ll be completing after buying.

The market situation applies here as well. Sellers in a buyer’s market will go out of their way to accommodate your needs, but sellers in a competitive market won’t even consider repair requests.

Step 5: Be Flexible and Creative

Sometimes thinking outside the box seals the deal. For example:

  • Sharing costs. Suggest sharing the cost of repair with the seller instead of asking them to absorb it.
  • Waiving unwanted contingencies. Waiving unpopular conditions can enhance your offer without damaging your interests.

Being flexible shows good faith and will sometimes get the seller to come halfway to meet you.

Step 6: Close the Deal

Once you have a deal, write it down. Don’t use verbal agreements—they are too vague and will be a headache later.

Collaborate with your attorney or agent to walk through closing terms and confirm everything is exactly the way you initially intended.

What to Do After Closing

You’ve just done a successful sale. Well done! However, wait; it’s not finished yet. Inspect the property during walk-through for final defects and implement some minor fixes like replacing locks or turning utilities on move-in.

Your dream home awaits—negotiate like a pro today!

Negotiations for house purchases can be daunting, but with the right skills and preparation, you will save a great deal of money and have your dream home. Always remember that knowledge is power—invest time in research, planning, and initiative.

Need more real estate guidance or help with your home purchasing process? Have a pro negotiate each transaction in your best interest!