When you think about home buying and selling, the first thing that probably comes to mind is the price. Whether you’re trying to sell your home for a profit or purchase a new house at a discount, real estate negotiation typically revolves around the sticker price on both ends. However, there are plenty of other real estate negotiation tactics. In this blog, we’ll explore the aspects of home buying and selling that you can negotiate aside from the purchase price, on whichever side of the negotiating table you’re on.
Real Estate Negotiations in Home Buying
You’re purchasing a home, congratulations! This is an exciting milestone, whether it’s your first home purchase or simply the next one. Hopefully you’ve been able to negotiate a fair purchase price with the seller, but there’s still more you can discuss in order to sweeten the deal.
Furniture and Appliances
Had your eye on something when you went on a home tour? Don’t be afraid to ask the seller if there are any pieces of furniture or appliances they’re willing to part ways with. In many cases, sellers will be happy to leave items behind in order to make the move easier. Plus, their next house may come with brand new appliances, so they won’t need to lug their refrigerator, stove, or laundry unit with them. The seller might charge you an additional fee to keep the items in the home, so do the math to see how much you’d be saving by purchasing their items vs. buying brand new ones. Also ask for a warranty on appliances so you’re covered if anything breaks.
When it comes to furniture, there’s a chance the seller is looking to buy all new stuff for their next place; if you liked what you saw, ask them if you can keep the pieces that stood out to you.
You found a house you absolutely love, but it needs some work to make it worth purchasing. This is something you can negotiate. As a buyer, you should always complete a home inspection on the home you’re buying. When you do, you’ll gather up your main concerns and share those with the seller. From there it is a negotiation.
Ask the sellers if they’d be willing to complete repairs on their own before you buy the house so you don’t have to worry about getting things fixed upon move-in. Studies show that sellers usually spend around $6,500 on preparations to get their homes market-ready. Be firm in your negotiations for home repairs, because if the seller is looking to make a move, they may be willing to put in the necessary elbow grease.
Even if the seller isn’t interested in making any upgrades for you, they might be willing to issue you a monetary credit, in the form of a concession, so you can get the work done on your own. If the sellers are motivated to move, they’ll do what it takes to get the house sold, so don’t be afraid to ask for what you want!
“At this point of negotiation, the buyer and seller usually have the same goal at heart – to complete the transaction. But, the health of the contract depends on those inspection repairs and whether or not the negotiation is successful and there is a meeting of the minds.”Knockstar Stephen Freudenberg
There are both risks and rewards when it comes to negotiating on repairs. Allowing the seller to leave certain items as-is, such as an old HVAC system, at the time of the sale could get you a significant discount off of the purchase price. But, keep in mind that you’ll have to schedule (and pay for) the replacement of these systems, which is a large undertaking, especially as a first-time buyer. Decide whether it makes more sense to take care of repairs on your own for a potentially lower purchase price or if you’d rather have the seller resolve any outstanding issues before the house is officially yours.
As a buyer, you can negotiate closing costs with the seller of your new house. Closing costs are the additional fees you’ll have to pay aside from your down payment on the house; these can include loan application fees, prepaid homeowners’ insurance, an appraisal fee, inspection fees, transfer taxes, escrow fees, attorney fees, recording fees, prepaid interest, prepaid private mortgage insurance, title insurance, and title search costs. They might also include the cost of obtaining a credit report, processing fees, courier fees, and paperwork preparation fees.
Oftentimes, closing costs can be upwards of 3% to 6% of the purchase price of the home; keep in mind that this total does not include the real estate commission. To put it into perspective, let’s say you purchase a $300,000 home and your closing costs are 5% of that purchase price; you’ll be paying around $15,000 just in closing costs.
Seeing your closing costs might result in sticker shock, especially after crunching the numbers on what you’ll have to put up for a down payment and monthly mortgage.
Asking the seller to pay all or a portion of your closing costs can help offset upfront monetary responsibilities for you. In some cases, sellers will agree to pay all of the closing costs, and in others, they will pay a portion; however, sellers’ concessions can never pay more than the amount of the closing costs. If the seller is eager to get the transaction completed, they may be willing to take on these additional costs.
Buying a Home & the Knock Home Trade-In
If you’re selling an existing home at the same time you’re buying, Knock can help you secure the new home of your dreams with our Home Trade-In program. On the buy side, we purchase your new house on your behalf with an all-cash offer. This offer is attractive to many sellers and usually gets you 2% to 5% off the list price; instant savings! Not to mention, cash offers help you win bidding wars so you don’t lose out on your dream home to another buyer. Lastly, they eliminate mortgage contingencies, so you don’t need to wait for your old house to sell before securing your new one.
Real Estate Negotiations in Home Selling
You’re selling your home and moving onto the next chapter. You want to maintain a solid profit, but also don’t want your home to sit on the market for months, or even years. Negotiation is an important tactic when selling a home.
Below are some aspects you can negotiate when it comes to selling your home, outside of the sell price.
Closing Date Flexibility
There are usually 30 to 45 days between contract and closing. But, if you need extra time to pack up and move out, ask the buyer if they’d be willing to push back the closing date. This will give you more time to get things in order without feeling rushed. Conversely, if you want to get out of your old house as soon as possible, push for an earlier close date (if it is possible between all parties). Your buyer may be even more eager than you and willing to move in sooner.
Note: When Knock purchases your new home on your behalf, the average closing time on that transaction is 21 days, which means you’ll be in your new place sooner rather than later!
Due Diligence Fees
In most states, a due diligence fee is a strong negotiating factor for the seller. The fee, collected from the buyer, is a safety net for the seller in case the buyer decides to back out of the deal. The average due diligence period is 10 days, but can be anywhere from 7 to 15 days, depending on how competitive the situation is. Once the transaction is past due diligence, if the buyer terminates, they will forfeit that fee to you.
You can also negotiate with the buyer to make the due diligence period shorter, to eliminate extra waiting time for the deal to close; if the buyer has their heart set on your house, they might be willing to make it a shorter due diligence period to get the deal one.
Offering a Home Warranty
Offering the buyer a home warranty as part of the purchase deal can help you seal the sale. You can purchase the warranty for around $300 to $600, and it will last for up to a year. The warranty gives the buyer peace of mind that if any appliance or home system breaks, they’ll be covered.
The home warranty is a great selling tool, especially if you’re selling or giving your current appliances to the buyer. It is also greatly attractive to first-time homebuyers, since they’ve never dealt with maintenance of an owned property before.
Selling a Home & the Knock Home Trade-In
The Knock Home Trade-In is the most convenient way to sell your home for many reasons. Because we purchase your new house on your behalf, you can move in right away and avoid the hassle of home preparations and showings.
Plus, when it comes to pricing your home to sell, we have a dedicated team of data scientists, home valuation specialists, and local real estate experts that help value your house and determine the necessary days on market to sell it. Our proprietary algorithm also incorporates current homes for sale, recent transactions in your neighborhood, and our 200-point on-site home visit to ensure any improvements and unique features of your home are used to price it accurately.
Lastly, if your house is in need of upgrades, Knock will advance you up to $10,000 and coordinate with contractors to get your home in the best possible shape for listing. These can help get you an ROI on the sale price that goes beyond the amount you spent. We’ll then settle with you at closing, so you don’t need to worry about spending the money upfront. For these reasons and more, Knock sells its customers’ homes to the best offer twice as fast as the rest of the market on average!
In Closing (Whether You’re Buying, Selling, or Both)
Whether you’re buying a new home, selling your old place, or doing both at the same time, there are many real estate negotiation points outside of the price of the home. You might be interested in furniture and appliances you saw in your new house, or maybe you need more time to move out as the seller; whatever the case may be, there are ways you can make the transaction more advantageous to you.
If you are not a real estate professional, all of these real estate negotiation tactics probably sound overwhelming. Don’t worry; you’re not expected to be an expert in the field. Your real estate agent, like those we employ full-time at Knock, will be there to give you advice and guide you throughout the process of both buying and selling. That’s why it is extremely important to find an agent or brokerage, like Knock, that can help you get the biggest bang for your buck on both sides of the transaction.
If you’re interested in trading in your current home for a new one, Knock can help!