Negotiating Your Offer

When you make an offer on a home, it can pay to have a clear idea of your strategy from the very beginning. Do you start low and let the seller try to talk you up? Do you fight for every little point, never yielding an inch? Is there such a thing as a guaranteed winning strategy?

When it comes to buying a home, there are never guarantees. Every home purchase is different, and even the best negotiators get outmaneuvered once in a while. Below you'll find a few basic ways to improve your chances when you make an offer on a home. Or, if you are considering a lowball offer or find yourself competing against multiple offers, we have specific tactics for those situations, too.

Your initial offer is the seller's first impression of you. That first impression can color the rest of the negotiation process, and may ultimately lead to success or failure. So how do you make a good first impression?

• Introduce Yourself: Most communication will take place between your agent and the seller's agent. But you can add a personal touch by including a short, sincere letter to the seller, introducing yourself and explaining why you love their home.
• Get Pre-Approved: Being pre-approved for your loan before you make an offer helps reduce the seller's uncertainty. It can be extremely frustrating for a seller to accept an offer, only to watch as the buyer's financing falls through.
• Be Prompt: If the seller is expecting a response from you, be prompt. If your offer is supposed to include a copy of an earnest money check, make sure it's there. If the seller accepts your offer, make sure the real check is sent over immediately, and that the funds are ready for deposit.
• Be Flexible: Does the seller want to close the deal a little faster than normal? Are they asking for flexibility around move-out dates? If you can accommodate the seller's needs, you can generate good will that can improve your chances in later negotiations.
• Have Good Timing: Maybe you noticed some issues during your home tour, and you think they justify a lower offer price. But going for every penny upfront might cost you the home. If you think issues with the home justify a lower price or credits for repairs, wait to negotiate until after the home inspection, when you'll have a professional opinion to back you up, and a seller who's already invested in seeing your offer succeed.

Typically, the results of your home inspection will give you more leverage for another round of negotiations with the seller. Your inspector will likely have turned up at least a few issues that need repair. Work with your agent to try to negotiate a lower price, or credits against the repair costs.

Most of the time, the home appraisal will come in right on target for the purchase price. However, the appraisal will sometimes come in low, meaning that the appraiser feels that the home is worth less than you're about to pay for it.

If this happens, work through your agent to try to renegotiate with the seller at the lower, appraised price. If the seller is unwilling to budge, your lender will probably not being willing to lend you the money for the home purchase. Sellers are often motivated to agree to a price reduction in these cases, as a low appraisal is likely to occur again with any future buyers.

If you've done your homework picking an agent, you should have faith in his or her ability to carry out negotiations on your behalf. An experienced agent has dealt with hundreds of negotiations, and may have worked with the seller's listing agent on several occasions. You should be clear about your desired outcome, but you'll ultimately be trusting your agent to protect your best interests.