You’ve been searching for quite a while. You’ve stayed up late at night comparing prices. And you’ve finally found it – the home of your dreams. Although the search seemed like the hard part, now you have another big task in front of you – making an offer which the seller can’t refuse. But there’s still a thought in your head – is there any room to negotiate?
Seeing that national home sales in January 2019 were up from the previous month maybe makes you think somebody else also has an eye for your house. Maybe you just want to claim it and get it over and done with. Maybe you’re hoping that your real estate agent will take care of the negotiating.
That would be wrong. Negotiating when buying a house has become a standard convention and you should always go for it. If you leave it in the hands of your real estate agent you could miss some opportunities to bargain for what you want. It’s not all about the price – if you get into the details of making the right offer you’ll see that there’s more you can negotiate for, saving up thousands of dollars. So let us check those details and start negotiating.
Think Twice About The Price
Of course, the first thing that comes in your mind when it’s time to negotiate is the sales price. But if you’ve found the home of your dreams maybe you shouldn’t risk your chances. Even if it’s priced a bit high, you think you can handle it. It would be a bit tight for your budget, but you’ll make it through. If you’re thinking this way, think again. Figuring out how much you can afford for a home isn’t only about the purchase itself – you need to think in advance.
According to Canada Mortgage and Housing Corporation (CMHC), your monthly housing costs, such as mortgage payments and utilities, shouldn’t be more than about 30% of your gross monthly income. Thinking this way you may realize that the sales price may actually be too tight for your budget and that there’s no point in being shy about asking for a lower one. But you need to do your research first – determine the prices of similar homes in the neighborhood so you can make a lower offer that fits within these comparable listings.
Think About Your Mortgage
Getting a mortgage has become a common step in home buying, and precisely because of that, many people don’t give it much thought at the beginning. But that’s also whymany of them have headaches later. You should always pay attention to what your monthly repayments will be, and you can figure that out with the simple use of free online mortgage calculators.
The quality of the financial information provided by these calculators is often up to date and can show in an easy to comprehend way just what you might be expecting in your real estate journey going forward. When you are fully aware of this, you’ll certainly be interested in reducing the amount you will pay in interest. This can also be a part of your negotiation process, using mortgage points. They work by lessening an interest rate for each point purchased, and the amount can be negotiable. This means that you can lower your interest rate simply by asking the seller to consider paying points on your mortgage. The best thing about seller-paid points is that they are actually tax-deductible for you.
Don’t Skip on Home Inspection
If your offer is accepted that may urge you to rush into closing the deal and skipping on home inspections. Don’t – instead of saving more, it will cost you later. That’s why you should first schedule an inspection and have an inspector who’ll tour the home and point out any potential problems. Maybe they’re too severe and you need to be able to walk away from the sale with your earnest money deposit intact.
If problems are smaller you can request from the seller to repair them before you close on the home or to provide you a financial credit so you can fix the problems on your own. Many sellers will agree on this kind of request just to keep the home closing on schedule. You could even negotiate allowances if there’s any need for remodeling – maybe not the full amount, but many will agree on splitting the cost.
Don’t Forget About Closing Costs
If you’re a first-time buyer, closing costs may catch you off guard. If you forget about them during the negotiation phase later you’ll realize that you’ll need some extra cash to complete the transaction. The total amount of these costs depends on the value and the location of the property, but you can expect you’ll need to pay somewhere between two and five percent of the purchase price. That’s definitely not small change, so you should use the fact that they can be paid by the seller or a buyer and ask them to do it. Most sellers will be willing to pick up the percentage, and if you’re in a buyer’s market and they’re anxious to move on from the property they’ll probably accept to take care of the whole amount.
We think that it’s perfectly clear why you should negotiate these things. It’s not only about saving money – it’s also about thinking it through and making sure you can afford to buy – and keep – the house of your dreams.
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