Negotiating The Deal

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Be Prepared

Before negotiations begin, you should consider the following.

• Decide the top price you are willing to pay, and do not compromise on it. Base this price on your budget and the home’s value.
• Determine the items you are willing to trade or compromise as negotiations proceed.
• Be prepared to back out if the seller is unrealistic about the home’s value, insists on a price that overextends your budget or will not compromise on an item you consider essential.

Avoid Hasty Offers

The Role Of The Buyer’s Agent

• Preparing a comparative market analysis of homes for sale or recently sold in the area.
• Finding out about previous offers, the seller’s situation and motivation for selling and other pertinent information.
• Helping you consider all variables subject to negotiation and including them, as appropriate, in your contract.
• Putting everything in writing. In most states, licensed agents are required to use published contract forms when presenting your offer.
• Presenting your offer and counteroffers in a way that helps the seller understand your reasoning and consider your terms favorably.

If you did not hire a buyer’s agent, the real estate agent will help prepare, present and negotiate your offer. You may wish to retain the services of a real estate attorney to help draft and review the sales offer and contract — before it is signed.

Understand The Details

Earnest Money. Even though earnest money may not be required, a deposit shows that your offer is “in good faith.” Amounts vary and are negotiable. You should know the following.

• Your deposit is usually held in escrow by a title company or real estate broker until closing, when it is applied to your down payment.
• You may forfeit your deposit if you fail to purchase the home without an acceptable reason, such as a failed inspection or problems with the deed or title.
• Your contract should state that the deposit will be refunded in full if the seller terminates the signed contract or fails to meet its requirements.

Financing. Your offer should be contingent on written loan approval within a specified time unless:

• You can complete the deal without a mortgage loan.
• You have a prepurchase loan commitment from a lender.

Personal Property. List personal property you expect to be included in the sale of the home, such as:

• Appliances.
• Water Softener.
• Window Treatments.
• Mirrors.
• Light fixtures and ceiling fans.
• Other agreed-upon items.

Selling Your Home. Unless you can afford two mortgage payments, your offer should be contingent on the sale and funding of your home. You should know that this weakens your buying position, because the seller has the right to sell to someone who can buy immediately.

Property Valuation. The purchase agreement should be considered void if the property appraises for less than the sales price, unless the seller is willing to make up the difference.

Closing And Occupancy Dates. Select a closing date for transferring ownership from the seller to the buyer. Depending on your state, you may also need to specify a move-in date.

Closing Costs. During the purchase and sale transaction, the buyer and seller incur one-time charges for items such as credit reports, the property appraisal and title insurance. Your offer should specify who pays for each charge.

Reach An Agreement

Schedule An Inspection

Schedule a professional inspection, even if you are buying a newly constructed home.

• Schedule an inspection early enough to give the seller time to complete repairs before closing.
• Check your contract for a designated inspection period, usually within 7 to 14 days of signing the contract and abide by it.
• Choose an inspector qualified to evaluate every part of the home, including the roof, foundation, wiring, heating and cooling system, plumbing, water heater and appliances.
• Confirm that the inspector will provide an inspection for wood-destroying insects that is acceptable to your lender.
• Retain a home inspection company or individual with top credentials. Members of the American Society of Home Inspectors (ASHI) are required to pass qualifying exams and possess minimum levels of professional experience. Call (800) 743-2744 or go online at www.ashi.org for a list of inspectors.
• Attend the inspection. Follow the inspector and ask questions to learn as much as you can about the home.
• Obtain a detailed, written report summarizing the inspector’s findings. The report should list areas of concern and defects requiring further inspection or repairs. The inspector should answer any questions you may have about the report.
• Schedule a follow-up inspection of any items repaired by the seller.

Even when a home is structurally and mechanically sound, the inspection report may include a long list of suggested repairs. There are no perfect homes, and a good inspector will always find items that can be improved. You should determine, with input from the inspector and your real estate agent, which repairs are nonnegotiable.

You Should Know

Schedule A Walk-Through

Know When To Terminate

• You cannot get financing.
• The home appraises below the contract sales price.
• The home inspection uncovers major structural or mechanical defects.
• The property boundary lines are not as represented by the seller.
• The title search reveals undisclosed easements or liens that will not be satisfied at closing.
• There are problems with the deed.

Buyer’s Remorse