Negotiating A Home Purchase Without Increasing the Sale Price In Charlotte, NC

Can you negotiate the home purchase with a seller without raising the price and still work out a deal with them? This was a question posed to me by a buyer where we were at the maximum we could go on the loan amount and they wanted the house. The answer is YES. There are other variables the seller is considering with your offer besides the price. And those other factors could be what are driving the price up.

First, due diligence fee. This is an ugly word for buyers. Because when you agree to terms with the seller you are basically writing them a check for a certain amount of money so they can take the house off the market while you go through your inspections, loan proceeds and appraisal. Most Realtors for the buyers (me included) look to minimize that dollar amount as much as possible as to reduce the buyer risk of losing money. But, a good negotiation tool if you really want the house is to offer more money upfront. Nothing speaks louder than money. Giving the seller more money upfront can help them swallow the fact they are taking less money for the house; because they know you are really interested in the house and now have more at stake.

I have used this before; transferring some of the earnest money into due diligence fee to get a deal done without raising the price. The seller realized they have an advantage now because the buyer has more at stake to lose if they cancel the deal.

Second, Shorten the due diligence period. I, like most of the Realtors, try to extend the due diligence period out to a week or a few days before closing. Some even go as far as to make it the day before closing. By shortening the time frame to maybe three weeks or less you are asking the seller to remove the house off the market for a shorter period of time while you go through your process and decipher the information to make a decision. it also shows you want the house and will push to have inspections and the loan process move along quicker and get the appraisal done as fast as you can....All positives for the seller.

Third, Increase your earnest money deposit. It may not seem like a lot. but in the eyes of the seller an increase in earnest money (even though it is refundable during the due diligence period for no reason if you cancel) shows you are really interested in the house and increases your likelihood of closing on the house.

Fourth, remove any contingencies form the contract. By this it could mean you need to sell a house, get a job transfer or anything that is contingent on you buying the house. By putting an offer with that on there the likelihood of you cancelling on the transaction increases dramatically. By removing such items form the approval you increase your buying power. Some sellers will not even entertain an offer in this market now with a contingency clause and if they do you is most likely paying a premium for it.

I had a buyer that wanted to purchase one of my listings that had a house to sell out of state. They offered full price and minimal closing costs to sweeten the deal knowing the contingency was out there. The seller turned the offer down and actually sold the house a few days later to someone else for what will amount to a $9,000 less money to him. But he did not want to tie the house up while the buyer was waiting to get a solid offer on his.

Fifth, shorted the closing date or extend it out. A lot of times the seller has to find a place to move to. if you have a close date that is to short; they may feel they are not going to have enough time to find a place and want more money in case they have to rent while they look for a place to live. Of course it cold also be the opposite as well and they may have a place and want to close sooner. I always talk to the listing agent about the sellers move when I am negotiating an offer in order to best advice my buyer of the close date to use in negotiating the transaction. It has helped me put deals together that i normally would not have because the listing agent was not forthcoming with the information or did not ask their seller.

Sixth, repair requests and inspections. I am a believer that the buyer is entitled to inspections and the seller should repair certain items in the house regardless. But, I am also not an advocate of nit picking there seller for everything that is wrong in the house. Agree up front to limit the scope of repairs to structural, electric, and plumbing issues and not small things like loose toilet seats and broken outlet covers to name a few.... Nothing turns a seller off more than thinking they are going to be nit picked for every little item in the house and have to pay that money out.

Seventh, Instead of going in with a pre-qualification talk to your mortgage lender and get a pre-approval letter. Spend the extra time and get the necessary documents to the mortgage lender it increase your buying power and solidly that you are a serious buyer ready to close on the house by getting a pre-approval letter upfront or during the negotiations. This will show the seller that a potentially major obstacle is cleared.

Eighth, If you have a high enough credit score you can qualify today for a conventional loan with as little as 3% down payment. Even though FHA loans are prevalent today the underwriting guidelines for them seems to be getting stricter. Coming in or changing to a conventional loan type increases in the eyes of the seller that you are more committed to buying the house and have more to put down on the house. it also increases the chances you can get approved and close on the loan better than a FHA loan type can.

Last, remove items you may be asking for in a house. Certain appliances are considered built in and stay with a house. But if you are asking for the refrigerator, lawn mower washing machine and dryer consider removing those in a negotiating tool. By you asking for them it is just another thing the seller has to buy when they move and to them it is money. by taking them off the list you increase the money without giving up any money in the sellers eyes.

These nine things you can do to help you purchase a home today without increasing the sale price of the house and I have used each and every one of them in the past to help negotiate and close transactions for a buyer...They do work.

Dave diCecco
Realtor/Broker
Coldwell Banker United-
Cell: 704-519-7895
ddicecco@cbunited.com
www.davedicecco.com