Buyer Beware: 5 Home-Buying Negotiation Tactics That Can Backfire
Without a doubt, buying a home is the most expensive purchase you'll ever make.
When it comes time to make an offer and negotiate, there are a few strategies I recommend avoiding if you want to have a smooth, successful, no drama transaction.
1. Making a lowball offer.
How low can you go? That seems to be the game some buyers want to play, assuming that if they start really low, they’ll end up getting the house for a song. NOT. I’ve never seen this tactic work.
The real issue in starting below the market value is that it you lose credibility. The seller either thinks you don’t know the market or you are looking to take advantage of them, and in either case, they won’t want to deal with you.
2. Asking for a bunch of add-ons
You might be feeling emboldened to ask for more than just the house, but you should resist that as the adage “it doesn't hurt to ask” doesn’t apply in this situation.
Sellers may become offended when you keep asking for more, and you risk alienating them. Even if they don’t like their furniture anymore, they would rather sell it on eBay or Craigslist than leave it for a greedy buyer.
3. Using the inspection as a renegotiation tool
Most inspectors are going to find something to recommend—such as adding gutters, improving the drainage, or upgrading all the smoke detectors—but those aren’t repairs that the seller is necessarily responsible for.
If the inspection turns up something major (like a cracked foundation), by all means that should be discussed. But you shouldn’t demand that the sellers fix every minor thing or lower their price.
You can’t expect a perfect house, and if you try to nickel-and-dime the seller, they might decide you’re not someone they want to do business with.
Remember how much you have already invested in the process, in terms of time and money, and be willing to let the little things go.
4. Negotiating with incremental amounts
Nobody wants to pay more than they have to for a home—why offer $350,000 when you could have it for $325,000? If you engage in too much back-and-forth, you'll risk alienating the seller. When buyers insist on making incremental counteroffers, they're just giving sellers a chance to move on to the next buyer.
Ultimately if you are willing to go up $8,000, don’t make four additional offers of $2,000 each. This is an exercise in futility, tires out both sides, and prolongs the transaction, it gets you nowhere tactically or psychologically.
5. Making a 'take-it or leave-it offer'
Most likely the seller has a target price in mind, and you may have a point at which you'll be unwilling to budge. But one of the worst things you can do is advertise this to the seller.
This is a "one-way offer," where buyers dig in their heels and state right off the bat, "This is our offer, you have X amount of time to respond, and if you don't take it, we're moving on."
This just puts the seller on the defensive and usually is a path to a dead-end offer. This mind-set of the “seller-is-lucky-to-have-me” is a no-win situation.
Sometimes buyers have to try this tactic themselves to see how it really ends up before they decide to get with reality; and understand buying a home is a collaborative, cooperative effort to achieving the same outcome.
Are you ready to Buy a Home? How can I help you today?