Purchasing a property is an extremely exciting and stressful venture that most of us ambition towards as a common goal. However, the process of purchasing a property is far more complex and timely than merely finding a home, transferring the funds, and moving in. Whether you’ve already purchased a few properties as a real estate investor or you are a first-time buyer, there’s no doubt you don’t want to get ripped off. Regardless of the property markets condition, it is imperative to be sure you are purchasing a property for a fair price. However, it can be relatively tricky to know whether the asking price is reasonable or not, especially if you are a first-time buyer, as you will be understandably overwhelmed with excitement at the landmark event of buying your first home.
Before purchasing a property at the listed asking price, you will need to evaluate the home and various other factors to determine if the price is fair. There’s no doubt that you want to get the best deal, so we have listed a few practical tips to help you negotiate the property price and potentially save a small fortune in the process.
According to James Durr – co-founder of Property Solvers, a leading UK-based auction house: “sellers often forget the amount of money, time and effort it takes to improve homes. Providing a realistic price deduction that takes into account the amount of work required is not unreasonable, especially if it can be proven.”
Most sellers will list property prices much higher than their actual value, and this common practice is generally to accommodate potential negotiations. However, this leaves unknowing first-time buyers exposed to a higher possibility of purchasing a property above its genuine value and losing out substantially as a result. One of the best approaches to instigating negotiations is to have the property inspected by professionals, such as home inspectors Syracuse, NY or a similar service in your area. Professional home inspectors will identify any areas of concern, from structural issues to minor repairs and everything in between. Therefore, you can negotiate the asking price down to accommodate these costs that you would have to invest in the property after purchase.
By comparing the general property prices in a specific area, you will be able to determine whether or not a properties price listing is too high. However, it is best to compare the price listing of similar properties and consider factors such as recent renovations or upgrades, the properties size, and home features such as security and others. If the property listing is notably higher than other similar properties in the area, you can negotiate the sellers asking price down with relevant reasoning. You can also rely on your professional real estate agent to determine comparable properties. It is also a great idea to consider properties in escrow, which are properties that have an interested buyer. However, the purchase process has not yet been finalized.
In many cases, you can negotiate a properties price listing by suggesting that the properties value should include at least some of the legal fees relevant when purchasing real estate. You will need to have the property transferred into your name and budget for other legalities and hidden costs. This approach is usually practical if the property has been on sale for quite some time and the seller is somewhat eager to sell. Because legal fees can be relatively high, it is best to negotiate for these costs. Many first-time buyers overlook the high price of the legalities and sometimes believe they are purchasing a property for a bargain price when the legal fees set them back significantly.
Suppose you are interested in a home that is being sold directly by the current owner. In this case, you can negotiate the asking price as there are absent agent fees. Real estate agents are entitled to a small percentage of the sale, which is why private listings should be notably more affordable than property listing from estate agents. By negotiating with the approach that the owner would anyways be losing this cost to an agent, you may meet in a compromise and reduce the property value by a small percentage. Most money-savvy real estate investors even search specifically for privately listed properties as the absence of an agent saves both the buyer and the seller quite a bit of money. However, it is best to brush up on your legal knowledge before opting for this route, as buyers can often lose out without a real estate agent’s expert advice and guidance.
A highly sought after neighbourhood may not hold onto such a status forever, and the same can be said for communities that are improving over time. When buying a home and negotiating the asking price, you should factor in potential area depreciation elements. Suppose the area shows signs of depreciating in the future. In that case, you should approach the owner with factual information to prove that the properties listing does not accommodate inevitable value depreciation, even if the home is in immaculate condition. You can investigate these neighbourhood details; you can rely on your real estate agent. However, it is also best to do your own research to certify your negotiation approach beforehand.
Some types of properties are more subject to negotiations than others. Suppose you are hoping to buy a new development in immaculate condition within an upcoming neighbourhood; you may not find much success with negotiations as the asking price will likely be fair and relevant. On the other hand, when purchasing a fixer-upper, a property with neglected maintenance or repair needs, or an older home, you will be able to negotiate the asking price down and save substantially.
It is crucial to rely on professionals such as home inspectors and a trusted estate agent when managing your negotiation approach. It is also essential to do your own research when evaluating neighbourhoods, home features, and other details. Buying a property can be both stressful and exciting, although you should never rush the process regardless of the situation. Negotiations can take time, and even interested buyers should allow for an escrow period to further investigate the property’s condition before finalizing a decision.