Negotiating a house price. You’ve done your research, looked at a bunch of properties, and found one you want to buy. Congratulations. Now it’s time to submit an offer and negotiate.
Negotiating a house price down is exciting as you see yourself getting closer and closer to adding a property to your real estate portfolio.
Your goal is to acquire the property at the lowest possible price without getting your offer rejected, so let’s look at a few tips to follow before submitting your offer.
Negotiating a house price – tip #1: make sure seller will consider investor offers
This won’t be an issue for most listings, but some foreclosures fall under Fannie Mae’s “First Look” program where only owner-occupants are allowed to submit offers (usually up to 20 days).
After the First Look period is over, if the property is not under contract, then the seller will likely consider investor offers.
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Negotiating a house price – tip #2: Research property location
As they say, in real estate it’s all about location, location, location. Whether a property is in a high demand or low demand area certainly affects how much you should offer.
If you’re buying in an area you’re not familiar with, have a Realtor run a CMA (comparative market analysis) for you to determine how long houses in that area typically take to sell.
Negotiating a house price – tip #3: consider condition of the property
Does the property need a lot of work or is it move-in-ready? Obviously, if a property is a fixer upper, you usually have some negotiating room, but be careful and do your due diligence so you know what you’re getting yourself into.
Negotiating a house price – tip #4: look at the cdom
The longer a property has been sitting on the market, the better the chance you can negotiate down. Ask your Realtor to check out the property’s Cumulative Days on Market (CDOM).
Not to be confused with Days on Market (DOM), CDOM will give you total days on market including periods where the property was withdrawn from the market.
Negotiating a house price – tip #5: find out if the property has offers
A property with a CDOM of 200 days and no existing offers is a much different situation than a property that’s been on the market for 7 days with multiple offers.
Negotiating a house price – tip #6: buy cash if possible
This is one of the biggest areas you can use to your advantage. Buying cash will give you the most leverage to negotiate down. However, even if you are financing with a bank, get the bank to give you a pre-approval letter that you can include with your offer. This will give the seller greater confidence that the deal won’t fall through.
Negotiating a house price – tip #7: close in under 30 days
Most single-family home sales close within 30-45 days. However, if you can close sooner than that, include that in your offer to give you some additional negotiating power.
Once you submit your offer, the seller has a choice to accept, counter, or reject.