Negotiating Mistakes When Buying A Home
Buying a house is a major purchase, and if you’re a savvy shopper, you likely want to score a great deal. But negotiating when purchasing a home isn’t the same as haggling at your local flea market. Make the wrong move, and it could cost you the deal (or more than you want to spend). So watch out for negotiating mistakes.
Blindly making offers without the facts, showing all your cards, and letting emotions get in the way are negotiating no-nos. Failing to discuss terms face-to-face is another pitfall, and getting overly aggressive with ultimatums will shut down sellers. Remember, negotiating a great deal isn’t all about getting the lowest price. Have a backup plan if things don’t go your way.
If you’re having visions of lowballing sellers and bragging to friends about how you saved thousands on your home purchase, step back. Negotiating without a plan is a fast track to rejected offers. Instead, be aware of negotiating mistakes when buying a house so you approach things the right way.
What Are Common Mistakes in Negotiating A House Purchase?
Whether this is your first house, second, or tenth, you never stop wanting to get a great deal. However, the cards aren’t always on the buyer’s table, and sometimes, the market is tough. Regardless of whether it’s a buyer’s or a seller’s market, you need to keep a few things in mind when making your offer.
Most importantly, avoid making these negotiating mistakes to keep your offer at the top of the pile. Otherwise, you end up rubbing sellers the wrong way, being less competitive than other offers, or losing credibility. On the flip side of the coin, you could end up spending a lot more than you intended when you started this crazy roller coaster ride.
1. Not Considering The Facts
Pulling a random number out of the air and making an offer solely to pay less isn’t a wise move. It’s essential to know the facts so you can make an informed offer that makes sense.
You should know how many days the home has been on the market and what comparable homes in the area sell for. If you put in a low offer, but the house has only been on the market a couple of weeks, you won’t get far.
However, if the house has been on the market for three months, it makes sense to offer below list price. Also, pay attention to whether or not the home had a recent price decrease.
2. Doing Everything Through Email Or Text
It’s common to do pretty much everything via email and text these days. The problem is, when you’re not there in person, it means the reader assumes your intent, feelings, attitude, etc.
What you text as a straightforward request could come across as aggressive or rude simply because the other person reads it that way. But when you handle negotiations in person, things are clearer.
3. Letting Emotions Take Over
Emotions in negotiating can make or break a deal. If you let your feelings take over, it can lead to rash decisions or snap judgments. When this happens, you risk a couple of things.
Either you lose the deal because you get angry, anxious, or impatient. Or, the seller picks your offer, but only because fear of losing the house makes you enter into a crazy bidding war. Therefore, stay calm throughout the process, and be clear on your limits.
4. Not Using A Real Estate Agent
Buying a home comes with lots of paperwork, rules, and information. A qualified real estate agent helps navigate the winding road of home buying and assists you through the entire process, including negotiating. They’ve been here before and know what to do and what not to do.
Your agent also knows the market and what other homes are reasonably selling for. This knowledge means they can best advise you as to what your next move should be. An agent will also stay on top of contingencies and other requests that are part of the deal.
5. Focusing Everything On The Price
Don’t make the negotiations all about the price. There are other factors to consider, including days till closing, home inspection contingencies, or closing costs. For example, you could offer full price, but ask the seller to cover closing fees.
Or maybe you offer $350,000 on a $365,000 house, but in return, you can close in 15 days. In other words, there are multiple layers to real estate deals. This is another reason using an agent is wise, since they can offer specialized guidance.
6. Listing What’s Wrong With The House
Did your mom ever caution you with these famous words, “If you can’t say something nice, don’t say anything at all?” Or maybe you’ve heard this one, “You win more flies with honey than vinegar.”
The point of these clever comments is to be kind. If your tactic for scoring a better deal is to list all the things you find wrong with the home, you’ll likely turn off the seller. Therefore, supporting your low offer with all the things you’ll need to change in the home isn’t the next move.
Not only will you likely offend the seller, but they’re not interested in all the changes you want to make. It’s really not their problem if you have to paint white walls because you love color or you want all wood floors and they have tile.
7. Making A Low-Ball Offer
Many times, a low-ball offer will end up coming back to bite you. Depending on the market, an offer of 10% under the list price could be considered lowballing, whereas in other markets it could be closer to 20%.
The takeaway is, going too low could risk the sellers shutting down completely, rejecting your offer, and moving on. The seller won’t negotiate or counter your offer. Discuss your offer with your agent before you make it to ensure you’re not going too low.
There are some situations where a low-ball offer could work. For example, a home’s been on the market for over three months or is priced relatively high for the neighborhood. However, you need to know these things before you make a reduced offer so you’re ready to defend and support your lower price.
8. Showing All Your Cards
If you’ve ever played poker, then you know you’re supposed to keep things hidden. Your cards, your emotions, etc. You need to have a poker face. Well, the same applies to your real estate negotiations.
Don’t let the seller or their agent in on any unnecessary information. They don’t have to know you’re desperately in need of closing on a home within the next two months. Likewise, you don't have to gush over every aspect of the house and tell them it’s absolutely perfect for you.
You also don't want to show your whole financial situation to the sellers. If your pre-approval letter states a price higher than what you plan to offer, talk to your lender about getting a revised letter. If you need to adjust it again following a counteroffer, your lender should be willing to do so.
9. Having No Back-Up Plan
Even if you found your dream home, until the deal is over, you should have a few more houses on your shortlist. This helps alleviate anxiety and fears surrounding the purchase and helps you avoid making rash decisions.
When you’re willing to walk away, it strengthens your position and negotiating power. It also keeps you from making a mistake or doing something you’ll later regret.
10. Giving An Ultimatum
Getting aggressive and pushy is never a good move in negotiations. It hassles the seller and undoubtedly leaves a sour taste in their mouth.
Making an offer and following it up with an ultimatum also leaves you no wiggle room. Then, if you do back down, it weakens your position, and the seller may not take future offers from you as seriously.
Are You Making Reasonable Home Buying Negotiations?
If you can’t seem to close a deal when you’re trying to buy a home, consider your negotiating tactics. Are you being reasonable, or are you making some of the negotiating mistakes listed above? Knowing the facts, dealing in person, and staying calm are all essential when you’re making an offer on a house.
Be kind, know your limits, and focus on the big picture, not just the price. Above all, be willing to walk away if things leave your comfort zone or push you beyond your budget.
Stacy Randall is a wife, mother, and freelance writer from NOLA that has always had a love for DIY projects, home organization, and making spaces beautiful. Together with her husband, she has been spending the last several years lovingly renovating her grandparent's former home, making it their own and learning a lot about life along the way.
More by Stacy Randall