Real estate negotiations are about more than just the purchase price. Making an offer that’s reliable and meets the needs of the seller can often help you secure a better deal.
Negotiation is an integral part of any real estate deal. As a Realtor, I always strive to help my clients negotiate the best price possible. With first-time buyers, this commonly involves explaining some of the key factors that can make or break the negotiation process.
To that end, I’m going to share with you 13 thoughts, tips, and strategies that will help you while you’re negotiating the purchase price of your new home.
1. Choose the Right Agent
The single most important aspect of real estate negotiations is working with the right agent – this can make all the difference. You want to be sure to choose someone with a proven track record, good communication skills, and who is respected in your local real estate community.
Those qualities are important because your agent’s ability to build rapport with the seller’s agent has the potential to sway negotiations. Deals often go to the buyer who feels easiest to work with, even if they’re not the top bidder.
2. Properly Gauge Your Leverage
First-time buyers often overestimate their negotiating power, especially in a competitive market like we have here in New York. They tend to come in thinking every seller is desperate, when in reality, many properties attract multiple offers shortly after being listed.
In slower markets, though, I commonly see the opposite – they underestimate their leverage and can miss opportunities to negotiate more aggressively.
3. Understand the Differences Between Hot and Cold Markets
Negotiation strategies can differ greatly between hot and cold real estate markets.
In a hot market, speed and clean, straightforward offers matter most. Buyers need to move quickly, waive contingencies, and show strength to negotiate a property's purchase price successfully. Even then, this can be challenging because sellers frequently receive numerous competing offers.
In a cold market, however, buyers can afford patience, negotiate more aggressively, and ask for extras like closing credits and repairs.
4. Lowball Offers Can Work – Sometimes
Over the years, I have seen first-time buyers have success with offers well below the asking price, but only under very specific conditions.
Usually, we're talking about a property that has been sitting on the market for months, or where the seller is motivated by an external factor such as a relocation or an estate sale. In these cases, you have some extra leverage because the timing and circumstances matter more than the percentage discount.
5. Remember, It's a Business Transaction
On the topic of lowball offers, many first-time buyers express concern over “offending” a seller by putting in a lower offer. I remind them: this is a business transaction, not a personal insult.
Sellers expect negotiations, and while lowball offers can sometimes be off-putting, the greater risk is overpaying because you were too cautious. With the National Association of Realtors recently reporting 56% of homes closing below their asking price, don’t be afraid to start low and work your way up as needed.
Many first-time buyers express concern over “offending” a seller by putting in a lower offer. I remind them: this is a business transaction, not a personal insult.
6. Sweetening the Deal
Oftentimes, making a deal isn't just about the number. Flexibility on closing dates, waiving or streamlining contingencies, or putting down a stronger deposit makes a lower offer more attractive. These details can be just as powerful as offering a higher price.
7. Keep It Cool With Counteroffers
Emotions definitely come into play when a seller makes a counteroffer, especially with first-timers. Some buyers get attached to a home and panic. A good agent will ground them in facts – local market comps, their budget, and their long-term goals – so that they don’t make an impulsive decision that could cost them.
8. Know Your Priorities and Limits
Speaking of budgets and long-term goals, the best advice I give is to know your price ceiling and stick to it. If the home fits your long-term needs, paying a bit more may be worthwhile. But you never want to stretch so far that you regret it later. Good data and clearly defined priorities will help you strike that balance.
9. Be Wary of Well-Intentioned Advice
It happens all the time: buyers come in with offer-related advice from parents or friends who are trying to help them secure the best deal possible. That advice is usually well-intentioned, but often out of sync with local realities.
In this scenario, I take the time to educate the buyer with hard data so that they understand the context without dismissing their loved ones.
10. Negotiating While In a Bidding War
Are you able to successfully negotiate the purchase price, even if you’re in a bidding war? Yes, it can and does happen.
The winning offer isn’t always the highest – it’s often the most reliable. Buyers win by presenting fewer contingencies, more secure financing, or even just better aligning with the seller’s timing. Sellers frequently choose certainty over squeezing out every last dollar.
11. Choose the Right Type of Mortgage
We've already discussed how price isn't everything; sellers tend to accept offers that they feel are most likely to reach the closing table. As such, it's essential to understand your mortgage options and how they can impact your negotiating power.
While cash is king, sellers typically give preference to buyers obtaining conventional mortgages over government-backed alternatives offered through the FHA, VA, and USDA. That's because conventional loans have fewer property-related restrictions and are generally used by more financially stable borrowers.
While borrowers obtaining a conventional mortgage don’t have the negotiating power of a cash-only buyer, they tend to have a slightly better edge in negotiations than someone with a government-backed loan – especially when they have a decent down payment.
12. Ask for a Customized Preapproval Letter
When your lender preapproved you for a loan, they probably sent you a preapproval letter showing the maximum amount that you're able to borrow. While being preapproved for more than your offer price may help assure the seller that you're a reliable buyer, it can be a disadvantage in negotiations, as it indicates that you could afford to settle on a higher counteroffer.
To improve your chances of successfully negotiating a home's purchase price, you should ask your lender for a preapproval letter customized to match each offer you make.
13. Negotiate With the Proper Mindset
At the end of the day, remember that negotiation works best when it’s collaborative, not combative. The goal isn’t to “beat” the seller; it’s to create a deal that both sides feel good about. Maintaining that mindset helps to keep negotiations productive and maximize the chances of the deal making it all the way to closing.
Making Your Offer Stand Out
I can't stress enough that the success of an offer isn't always about the purchase price. In fact, that often takes a backseat to a lower offer that stands out as more likely to close and better meets the seller's needs.
So, what can you do to increase your negotiation power and get an offer accepted at a lower price?
Down Payment: Buyers with larger down payments often have better luck in negotiations than those putting down the bare minimum.
Earnest Money Deposit (EMD): The larger your earnest money deposit, the more serious you’ll appear to the seller as you’re providing more security that you intend to close the deal.
Flexible Closing Date: Many sellers want a buyer who can close as quickly as possible, but that isn't always the case. For example, if the seller is trying to purchase and move into a new home simultaneously, they may be looking for someone with the flexibility to work around their schedule.
Limit Your Contingencies: This can be a double-edged sword, as contingencies, such as for inspection and financing, are highly beneficial to the buyer; limiting them can increase the risk you're taking on. However, offers with fewer contingencies are more likely to get accepted, even if they're for a lower amount. Proceed with caution, though, and be sure to discuss the pros and cons with your real estate agent thoroughly.
Write a Letter to the Seller: While not always an effective tool, writing a personalized letter to the seller introducing yourself and explaining why you want to purchase their home can sometimes make a significant difference when your offer is lower than what they’re looking for.
Other Things You Can Negotiate Besides Price
Purchase price is typically the primary target for negotiations. Still, it's not the only thing you can negotiate when buying a home. Here are some other areas of negotiation you should consider as well.
Closing Costs
Closing costs are all of the expenses associated with obtaining a mortgage and acquiring a property. For most borrowers, these will range between 2% and 6% of your purchase price, depending on the lender you choose and the type of loan you apply for.
Sellers can contribute a portion of their proceeds to cover these costs. However, different types of loans will have varying limits on the amount of interested party contributions a buyer can receive.
Lender Discount Points
Lender discount points can be purchased to reduce the interest rate that you pay on your loan. While they're generally considered to be part of your closing costs, you can also frame your offer to ask the seller to pay for a rate buydown specifically.
Repairs
Repairs are a common negotiating point, especially on deals with an inspection contingency. If issues arise during your inspection, you may have better luck asking the seller to make needed repairs prior to closing rather than attempting to renegotiate the purchase price.
Keep in mind, however, that some types of mortgages – such as those insured by the FHA – have minimum property requirements regarding specific issues which absolutely need to be fixed for the loan to be approved.
Homeowners Association Dues
If you’re buying in a neighborhood or building with homeowners association dues, consider asking the seller to prepay them for a set length of time. This can help first-time buyers free up funds during the initial stage of homeownership to assist with the other moving-related expenses they’re bound to face.
Appliances
Appliances are generally considered personal property, and while the seller may plan to leave them with the home, don't assume it. Asking for major appliances to convey as part of your offer can save you from needing to spend the money to purchase your own as soon as you move in.
Home Warranties
Purchasing a lived-in home – especially an older one – comes with a certain level of risk, even if you've had a thorough inspection completed. By asking the seller to pay for a home warranty, you can help ease any concerns over major appliances or systems, such as the plumbing or electrical, failing shortly after you move in.
In a survey of 2,000 home warranty customers, 28% reported that they received their warranty coverage with the purchase of their home, illustrating how common this is as a negotiation point.
Furnishings/Décor
This could be anything from a sofa to a chandelier – if you like it, don't hesitate to ask for it in your offer. For all you know, the seller could be planning to get rid of the item and buy something different for their next home, anyway.
Lawn Care Equipment
As a first-time buyer, you may not be moving into your new home with everything needed to maintain its exterior. If you noticed lawn care equipment, such as a riding lawnmower, during your tour, that’s something you can ask for.
This negotiation point can be especially successful in situations where the seller is downsizing or relocating to a maintenance-free property, such as a condo.
Professional Cleaning
In most cases, the home will likely be move-in ready when you purchase it. The seller may have even hired a company to freshen up the floors and carpets before putting the property on the market. But if you're intent on negotiating the best value, consider the stipulation of a professional company coming in and doing a top-to-bottom cleaning.
Summing It All Up
As a first-time buyer, it's essential to understand that real estate negotiation is a multifaceted process. While price is important, it's certainly not the only factor that sellers consider. Even in competitive markets, if you're able to demonstrate a reliable offer and straightforward closing process, you likely have the power to negotiate a more favorable purchase price.
