Negotiations in Real Estate: Issue 8
When it comes to a real estate transaction, whether you're a buyer or a seller, everything is negotiable. For many couples and individuals, a house or property will likely be the largest asset they ever own, which is why when it comes to the actual transaction, negotiating is incredibly important. Negotiating in real estate is more than just deciding on the sale price of a property or who will cover closing costs, and some negotiations will probably happen after the sale agreement is signed. Every aspect of a property can be negotiated, and it will be important to come to the negotiation table ready for anything.
Primary Items for Negotiation:
The seller will want the highest selling price; the buyer will want the lowest amount. Unless you're in a bidding war with multiple offers, there will be room for negotiation when it comes to the actual sale price of the property. As a buyer, you don't want to feel like you're getting taken advantage of, and as a seller you don't want to feel like you're getting low-balled. Area comps and other pieces of information about the property will help both parties negotiate a fair price. Also, if a home is need of modern updates, or is just rundown in general, a buyer can use that to their advantage when it comes to negotiating the sale price.
A motivated seller will likely want a quick closing, but if a buyer has to wait for financing, or they have a contingency (like their current home has to sell), negotiating a closing date can either be very quick or complicated. Another item that can be negotiated: when the seller vacates the property. For some sellers, they may need additional time for moving their items, etc. Both parties have the option of negotiating a possession date or even a rent-back agreement, allowing the seller to remain in the property for a specified amount of time after closing.
Who normally pays which closing costs vary state by state, but as it's said, everything is negotiable. A buyer may be able to negotiate with the seller to see if the seller can will cover some of the buyer closing costs.
Inspection and Repairs:
Home inspections can pinpoint items that should be updated or fixed. It's up to the buyer and seller to negotiate on the items that will be fixed based on any inspections and appraisals that take place. If the seller doesn't have the funds to fix things that come up in an inspection, the buyer may be able to use it to his/her advantage when it comes to negotiating other items like the final sale price or who will cover the closing costs. While the seller normally specifies that the house comes 'as is,' there is usually opportunity for negotiation.
Unless it's clearly stated that certain fixtures or appliances will go with the seller, a buyer can negotiate to keep fixtures and other items upon the sale of the property or require they be removed. Fixtures can include appliances, blinds and window panels, outdoor equipment, a hot tub and anything else. If a buyer sees something they'd like, there's no harm in negotiating that the items stay with the new owner.
Home warranties have become extremely popular in the U.S., especially for those buying homes that are not new construction. These plans typically cover a home's systems (central air, central heating, etc.) and major appliances, with some plans even covering more items. Buyers have seen an increase in home warranty negotiations as they're a great asset to a new homeowner.
When buying a property, the buyer will either be able to pay in cash, require a mortgage loan to cover the cost or have the seller carry the contract. Buyers who will need a mortgage may have to wait to be approved, whereas buyers with cash will likely be able to close sooner. A way to avoid financing negotiations is to, if applying for a mortgage, be fully pre-approved prior to making an offer.