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Negotiating a Home Purchase

Negotiating a Home Purchase

Negotiating a home purchase requires in-depth knowledge.  Your agent should be well versed on market value in the area to properly negotiate the price.  But the needed expertise is not limited to price.  Your agent will need to have a full understanding of common negotiables and contingencies that can be used as leverage to get you the best deal and terms.

Common Negotiables in a Home Purchase

  • Price
  • Earnest Money Deposit  How Much? Does it “go hard” at any point to secure the seller’s risk?
  • Inspection Periods  Since you may cancel your contract without risk during an inspection period, the shorter the better for most
  • Appraisal Contingencies  are tough if the seller has an over-improved home or if there have been distressed sales close in the neighborhood recently.  Removing an appraisal contingency means that if the home is valued at less than the purchase price, the buyer can’t cancel the contract based on the failure to appraise. However, the buyer will likely still be protected by the finance contingency. The buyer can bring additional cash to the table as the mortgage company will not lend above the appraised value. A cash deal without an appraisal contingency is risky for the buyer because, in a seller’s market, the seller will be less likely to reduce the purchase price to make up for the appraisal deficiency. If the appraisal comes in very low with no contingencies left in the contract, the buyer may be better off forfeiting their earnest money deposit than paying way above value.
  • Home Warranty  purchases and costs can be apportioned many ways, buyers may ask the seller to buy at closing in lieu of asking for repairs or updates. (home warranties are worth looking into)
  • Repairs and Credits  can be requested for items that were flagged during the home inspection.
  • Closing Credits  can cover a significant part of your downpayment or prorations included in the contract. You can make a very attractive offer to a seller for a higher price, better terms, and faster closing to offset the seller’s decrease in net proceeds from closing credits. Ask your agent & lender.
  • Closing Date  is important to the seller because it factors into their carrying costs, relocation plans, and purchase of a new property. They worry that if it takes too long you may not close and they will have wasted valuable market exposure time. Or depending on their situation, they might want more time to close.
  • Leaseback  is the term for allowing the seller to stay in the property for a period of time, accompanied by a lease for a rental amount. This may make your offer very attractive for the right
  • Buyer financing  can affect appraisals, inspections, loan costs, loan amounts, and closing times. Due your diligence and make the best EDUCATED decision for
  • Furniture  may be written into a contract but cannot be financed into a home loan. Selling furnished might be convenient for an out-of-state seller. On the other side, perhaps you want to ask for a custom kitchen table built to match the kitchen.


The most important things to know about negotiating a home purchase:
1- Ultimately, everything is negotiable.
2- You get more flies with honey.

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