Housing: Here Are 5 Ways To Negotiate a Lower Price, According to Experts

Vance Cariaga

Sat, Nov 25, 2023, 1:00 PM 5 min read

If there has ever been a good time for house hunters to master the art of negotiation, it’s now, with home prices near historical highs and rising mortgage rates contributing to the highest monthly mortgage payments ever.

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The median home price in the United States was $412,000 in September 2023, Forbes reported, citing data from Redfin. That was up 2% from the previous year — even though 300,000 fewer homes were on the market.

Mortgage rates shot up to 7.63% from 6.09% over the same time frame. Average mortgage rates (30-year fixed) have since slipped back to 7.29% as of November 2023, according to Freddie Mac, but are still near their highest point in more than two decades.

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If You Want To Buy, Be Prepared To Negotiate

Successfully negotiating a lower price in this kind of market depends on a variety of factors, including where the home is located, prices of similar homes in the area, how long the home has been on the market — and how long you are willing to wait for the seller to cave. This makes it even more important than usual to familiarize yourself with local market trends.

You might also want to get started sooner rather than later, according to Cappy Hagman, Broker at Coldwell Banker Howard Perry and Walston, a real estate firm with offices in North Carolina’s red-hot Triangle area.

“You can’t outsave the rising market values, and if you’re waiting for interest rates to drop you may be waiting a very, very long time,” Hagman told GOBankingRates in an interview.

Once you start your search, you’ll need to get into the right mindset to negotiate prices successfully.

As a blog from Rocket Mortgage noted, negotiating a home price requires research, patience, organization and compromise. It also requires the commitment to walk away from a deal if the price and terms are not right — no matter how much you might love the home. Hiring a local real estate agent with expertise in your local market is a good first step.

Another thing to keep in mind is that many houses are priced with wiggle room baked in, meaning sellers often expect counteroffers below the listing price.

Beyond all of those factors, here are five ways to negotiate a lower home price, according to experts:

Be Prepared Financially

To negotiate from a position of strength, you should know exactly how much money you have for a down payment and how big of a mortgage you will be approved for. It’s a good idea to get pre-approved for a mortgage loan before you submit an initial offer letter so the seller knows you are serious about buying and have the financing to do so.

If you already own a home, selling it ahead of time could also put you in a better position to negotiate, according to SoFi. The reason is you won’t have to wait until your home is sold to go forward with the buying process.

Learn the Market

If you don’t know how much the house down the street recently sold for, you’ll have a hard time determining the right price for the home you want to buy. Knowledge is power when it comes to negotiating — especially if you learn that the house you’re eyeing is priced above recent comparable prices. Getting an appraisal of the home is helpful in this regard as well.

Just keep in mind that if you are in a hot seller’s market where other bids are coming in, you’ll have a much harder time getting a lower price. If that’s the case, consider walking away and investing your time in another home. In a buyer’s market, however, you might be able to offer 10% below the asking price and even ask the seller to pay closing costs or certain other concessions, according to SoFi.

Get an Inspection

This is something you should do anyway, but it can be especially useful when negotiating. If the inspection turns up structural problems, such as issues with the foundation, roof or HVAC system, it puts you in a much better position to negotiate. Your negotiation might come in the form of a lower price or concessions on the part of the seller, such as paying for repairs or offering a credit on closing costs.

Widen Your Search Criteria

Hagman suggested looking for houses with “higher-than-normal” days on the market and expanding your search to less popular areas. Doing this will improve your negotiating position because chances are the seller doesn’t have a lot of house hunters beating down the door.

You should also “consider homes that need some work and negotiate repairs into the purchase contract rather than waiting to ask later,” Hagman added.

Find Out Why the Home is Being Sold

This can be important information in a negotiation. For example, if your seller is moving because they’ve bought a new home, then you know they are probably anxious to sell, which improves your chances of getting a discount off the listing price. Your realtor can be a very useful resource in this regard because they are often privy to this kind of inside information.

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