It may be a seller's market in much of the DC area but there are still opportunities for a below-market sales price and a great deal. This pursuit is not without its challenges, but through careful searching and strong negotiation, it is possible to buy a great home for less than the list price.
1. Start with your goal and work backward
- Figure out your bottom line, and create a negotiation strategy based on your objective.
- Your objective may change, but you need to know where you want to end up to have a shot at getting there.
2. Create your narrative
- Have a reason behind your offer, and have facts to support this.
- When negotiating an offer on a home that has a list price above market value, be prepared to clearly explain your position and valuation.
- The ability to help you craft a compelling case is something that separates an average buyers agent from a great one.
- If you are requesting atypical terms in your offer, be sure to provide an explanation of why - a seller may be more willing to consider if they know the background.
3. Gather intel
- The more you know about the sellers and their situation the better.
- Where are they moving and why? Have they already moved? Are they more driven by finances, timing, or both?
4. Leverage time
- There are times when it is advantageous to respond quickly and there are times when it is best to wait before responding. If the seller appears anxious about time elapsing while waiting for a response, this is a strong indicator of their interest in reaching an agreement.
- Patience and persistence are important, some people take more time than others to make decisions, this isn’t necessarily an indicator of their willingness to reach an agreement.
5. Avoid emotional responses
- Rationality is key to making good decisions
- It can be tempting to take things personally or create a reason in your mind why the seller isn’t giving you what you want, but keep in mind this is a business transaction, stay focused on the objective and be willing to do what it takes to get there, even if it hurts your feelings.
6. Give something with each counter offer
- This is a good area for creativity. Even if you offer something the seller doesn’t want, it shows an intent to reach an agreement and compromise
- Whether this is one less day on a contingency, an earlier settlement date, or letting the sellers leave behind unwanted possessions
7. Do the math
- Calculate the monthly payment, and down payment + closing costs for each counter offer, these figures are more relevant to your decision making than the difference in sales price.
- Calculate the cost of other concessions or offer terms. If having settlement a few days early means that you are making a housing payment on more than one place, figure out how much it actually costs. Estimate the monetary value of other terms, for example, a home inspection without the right to negotiate repairs.
8. Negotiate in writing
- While this is more work and effort for the agents, negotiating in writing shows a greater level of seriousness that isn’t the same for verbal or email negotiations.
9. Don’t be afraid to walk away
- Easier said than done, but if you’re not prepared to walk away then you’ve already set yourself up to lose or give up more than you need to.
- If the negotiations don’t result in a successful agreement, leave the door open for a future conversation, seller's motivation levels can change over time.
These tips are most applicable to homes that have been on the market for a little while or are overpriced (and don’t have strong buyer demand). For new or high demand listings, check out our post on crafting a competitive offer here.