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When you are looking to buy a house, you surely want to get the best price and terms. In real estate, price is king as home buyers set their price range from the start and shop for homes within that set range.
In buyers’ markets where inventory is higher than demand, buyers are getting a little more room for leverage. This creates opportunities for negotiation which can work to your advantage.
How do you deal with an overpriced property that you want to buy? The best way is to have a good strategy for negotiating the price.
To most people, their home is their most valuable possession. It is the place where they have built a lifetime of memories. They have also invested a lot of time and emotion into making their home into what it is. It is not surprising that when pricing a home, some sellers tend to give it more value than market price.
Many sellers also have the misconception that pricing their home higher will yield a higher sale price.
In looking at homes for sale, you may find a house you love that seems a bit too high. You may discover necessary repairs that would bring your expenses up. In this type of situation, you will need to do negotiations with the seller or the listing agent.
In order to have a good strategy, you can start by understanding why the property is overpriced so you can submit a reasonable counter-offer.
Since you are investing good money into the house you are buying, you’ll want to know you are paying a fair price. How can you tell if a house is priced too high?
Below are 5 tell-tale signs that a property may be overpriced.
In a perfect world, real estate transactions occur without a hitch. Sellers keep their promises and buyers pay a fair price. But in truth, negotiations can go sour, closings postponed, and buyers or sellers get disappointed.
The wait and see strategy can often be seen even in sellers’ markets but it works only for home owners with truly exceptional properties. In most cases, an overpriced home will remain unsold until such time that the owner lowers the listing price.
If you have found a home that you think is overpriced, you can still negotiate and make an offer with these negotiation strategies.
For buyers, it is to their best advantage to hire a real estate agent because doing so doesn’t cost the buyer a dime. The buyer’s agent will be 100% committed to pushing the same but at your price and terms (otherwise, the buyer’s agent does not get paid). The buyer’s agent gets his commission from the seller if the sale pushes through.
An experienced real estate agent has excellent negotiation skills and has more chances of success when it comes to negotiating with the seller.
When submitting an offer for an overpriced home, you must be prepared for the possibility that things may not work out. Some home sellers won’t budge even if buyers tell them their asking price is too high.
If you are in a buyers’ market, you can afford not to make an offer for an overpriced property. You can find another property with a fair price. For this reason, it is not advisable to fall in love with any house and become emotionally attached.
But in sellers’ markets where supply is less, homes sell quickly and you may be wasting time even negotiating the price.
If the property has been on the market for a long time, the seller may be more willing to negotiate the price.
The bottom line – understand your situation, recognize your leverage, the psychology of the seller, and accept when it’s time to move on and go to plan B.
The best way to achieve the objective of negotiating a high asking price for a house is to have factual data supporting your offer. Make sure you are providing data on homes that have sold recently. Your real estate agent will be able to help you with preparing market comparables that you can attach to your offer.
Another way to come on strong in a negotiation is to be prepared with the earnest money and a mortgage pre-approval. By showing the seller that you are ready for closing, you can make your offer appealing.
It is very likely that the seller will come back to you with a counter-offer. Depending on how badly you want the house, you can decide to stay firm with your offer. If there are other offers on the property, you can keep other houses in mind in case your offer is rejected.
An offer can be firm or conditional. In a firm offer, the buyer is prepared to buy the property without any conditions. Once the buyer accepts this offer, the house is considered yours.
In a conditional offer, you place one or several conditions for the purchase. Examples of conditions in real estate offers include approval of the necessary financing and satisfactory results of a home inspection report.
Such conditions typically provide for a period of 3 to 7 days to give the buyer enough time to confirm with their lender and wait for the results of a home inspection. Upon completion of these conditions, the offer becomes firm. If conditions are not met, such as financing disapproved or home inspection results unsatisfactory, the seller is notified and the offer terminated.
These factors should be included in the offer submitted by a buyer:
Negotiating the sale price is tricky but it is possible to successfully bring down the asking price of a house.
A real estate agent is experienced in handling negotiations. Keep in mind that the listing agent works for the seller and will want the house to sell for as high a price as possible. On the other hand, a buyer’s agent works for you and will be 100% committed to helping you acquire the property at the right price.
Further, by having your real estate agent handle the negotiations, you keep the negotiations impartial and less stressful.
Buying or selling a property has a direct impact on your budget and your quality of life. This is why it is so important to have the right person assisting you. Use our service to find a real estate professionnal who truly meets your expectations.
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