Home sellers have the upper hand in the current housing market. Prices are at record-breaking highs and inventory is at near-historic lows. Many properties on the market are garnering multiple offers and are selling faster than ever before, according to the National Association of Realtors® (NAR).
Despite favorable conditions for sellers, there are still ways buyers can work a home purchase to their advantage in the current environment. From submitting the initial offer to closing the deal, there are plenty of opportunities throughout the transaction that buyers can seize.
7 items to negotiate when buying a home
- Selling price
The median price for an existing single-family home is currently $334,500 — an all-time high. Rising prices and low inventory may tempt buyers to forgo negotiating the asking price out of fear of losing a home, but skipping that step could mean overpaying.
Even when a seller receives multiple offers, the highest bid isn’t always the best. Sellers will consider other factors such as your ability to close quickly, your likelihood of getting a mortgage approval, whether you’re an in-state buyer and your flexibility. Often, sellers are willing to accept a lower price if the rest of your offer is attractive.
Consult with your real estate agent on what to offer, as they would have the pulse on the local market conditions and whether the seller is likely to negotiate.
- Closing costs
Buyers can typically expect to spend between 3% and 5% of the purchase price on closing costs. For a $300,000 home, that’s between $9,000 to $15,000 — so closing costs can add a significant amount to the home purchase.
However, sellers will often take on some of your closing costs if it speeds up the timeline or increases your chances of getting approved for a loan. Asking the seller to cover some of your closing costs — for example, a portion of the property taxes — can offset a higher purchase price if the buyer was unwilling to budge there.
You can also negotiate fees you pay directly to a third party, such as the cost of the appraisal or inspection.
- Furniture and appliances
If an item in the home — such as furniture, custom appliances or equipment — catches your eye, you may be able to use that during negotiations.
For example, if the seller won’t lower the selling price or they won’t come down far enough, you could ask them to include one or two items in the home that are of value. They may be amenable to this, especially if it’s something that would be a hassle to move, like a piano, backyard swing set or heavy equipment.
- Insurance
In addition to negotiating items that affect the purchase price, consider negotiating the multiple types of insurance you’ll need to secure. For example, you can work with your lender or attorney on the cost of your title insurance.
Also, getting your homeowners insurance policy as low as possible will reduce your monthly mortgage payment. The best way to get a competitive rate is to shop around. Start with your current insurance provider — especially if you have a long-term relationship with them. But don’t stop there. Consider getting quotes from at least three insurance companies. If you find a lower rate than your current insurance provider offers, ask if they will be willing to match it.
As a homeowner, you also have the option to bundle your different types of insurance policies, which could save you as much as 25% with some providers.
- Repairs
Having to complete significant repairs can often delay the sale and add considerable expense for the seller. Use this to your advantage. Perhaps you could negotiate the sales price down in exchange for being responsible for some or all of the repairs. This is especially advantageous if you are handy and can take on the projects yourself or want to create a custom space during the repair process.
- Move dates and leasebacks
Consider the buyers’ situation and what they need. Often, they may be negotiating a sale and a purchase simultaneously, so if you can offer a quick closing (or a later closing depending on their needs), that could be a factor in the negotiations.
If possible, consider letting them lease the property back from you until they find a new home or close on their purchase. The more flexible you can be as a buyer, the more willing the sellers may be to make concessions throughout the transaction.
- Home cleaning
You could ask the seller to have the home professionally cleaned for you if they won’t negotiate other items. A professional home cleaning can cost $400 or more, depending on the location and size of the property; a seller may be willing to cover that instead of compromising on other matters.
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