What you need to know about negotiating

In any real estate negotiation, buyers ask and sellers push back -- because if you're the buyer and you don’t ask, you don’t get.

While sellers want the highest price and buyers want the best deal, the two have to meet somewhere in the middle for the deal to close. Negotiating for a home is important since this is the largest asset most people own and there’s potentially a lot of cash at stake.

The premise or foundation for negotiation is looking at the data and how it breaks down in black and white; then it becomes a dance of personalities -- the two agents and the parties of buyers and sellers. At the end of the day, everybody has a goal to close a transaction. Sellers want to sell, and buyers want to buy, but sometimes, it gets a little gray in between

One party always has the upper hand, however. In a buyer’s market, those looking for a property can walk away if they don’t like the terms, since they have many homes to choose from. In a seller’s market, with bidding wars and multiple offers, the homeowner can be as picky about the myriad terms of the sale as his or her agent allows.

In any market, a truly motivated seller is less inclined to engage in lengthy negotiations;  they just want to get the deal done!

For those new to the real estate buy/sell process: The negotiations start once the seller receives a written offer. Since everything is negotiable, agents for the buyer and seller go back and forth in writing, whether that communication is via email or signed forms.

The objective is agreement on the deal’s terms, which include price, time lines, contingencies and items that may convey with the property. There’s constant negotiation until you actually close the deal.

Here are guidelines for what sellers and buyers might ask:

1. Price

Buyers and sellers try to negotiate the best price possible for them, but that means different things; The seller wants the highest price and the buyer wants the least amount to pay -- usually, it ends up somewhere in the middle.

Buyers don’t want to overpay or price themselves out of a resale in the future, while sellers want to make sure the deal makes sense for their financial plan.

2. Closing costs

Buyers have to pay closing costs for their new purchase. Things like taxes, insurance, lawyer fees, etc . These costs can be upwards of 5-10% of the overall price of the home.

“If [a buyer] asks the seller to make a concession on [his or her] behalf, they’re likely going to have to pay a higher asking price.”

3. Closing date

Sellers can negotiate for speed when they need to get their capital out of the home fast; and closing dates will affect buyers' monthly cash flow once they own the home. Keep in mind, when a buyer closes on the house, they might skip the next month’s mortgage payment. Maybe they want to close at the beginning of a month so they skip the next month.

4. Financing contingencies

Buyers can have a more competitive edge by having their mortgage fully approved prior to making an offer. That preapproval shows that their finances are in order and they can afford the property. If another buyer writes an offer on the same home, and you don't have to make the offer conditional, and they do, it can mean the difference between the seller accepting your offer, or theirs.

5. Home warranty

A buyer can ask for a guarantee that the appliances and other included items in the home are in good working order, or a seller can offer one. For example, if you buy a home that has a pool, in the winter, but you won't know if the pool works for sure until spring, you can ask for a guarantee that the pool and all related equipment etc is in good working condition. If you have an agreement in place, the seller would then have to pay for any repairs necessary if it's discovered that the pool does not, in fact, work.

6. Home repairs

Buyers also have a ton of room to negotiate when a home needs a lot of updating. When a home is out-of-date with appliances that don’t work, popcorn ceilings or cracked pool foundations, for example, a buyer can ask for a lower price because of the cost to bring the home back to today’s standards.

Sellers can also specify that their house is being sold “as is” and that they won’t make any repairs.

7. Furniture

Personal property, like furniture, home theater equipment, and patio furniture, is also up for grabs. If the buyer wants all the furniture, it becomes very much of a tradeoff and compromise between what everybody wants.

Whatever’s included / excluded needs to be stated when the contract is finalized.

8. Appliances

The stove, dishwasher, microwave and any built-in appliances may come with the property, but the washer, dryer and secondary fridges aren't always included. In different markets, people don’t always convey every appliance -- they don’t want to give it all away. They want to see how the negotiation goes.

9. Inspection

While waiving an inspection often comes with "buyer’s remorse," buyers will often waive the inspection because it forms one more condition on an offer sheet. If the market is hot and there are multiple offers expected, a buyer may want to waive the inspection. On the other hand, if it's a slow market, a seller may get an inspection done at his expense or provide an inspection to show how sound the home is.

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