Home Buying Guide
Negotiating the purchase of a home.
STEAMBOAT PILOT & TODAY
Buying a home is the biggest investment that many people make during their lives. Knowing how to negotiate the best deal possible not only makes this purchase less stressful, it also makes it easier for buyers to find the properties that fit their needs and fall into their budgets.
A few simple tips can make the process easier. Most of these suggestions come down to being informed: the more buyers know, the better chance they have of getting what they want.
First, a buyer should learn who is representing the seller. Many real estate brokers are sellers' brokers, which means they try to get the sellers the best terms. Transaction brokers facilitate the sale but don't represent either the seller or the buyer.
Exclusive buyers brokers don't accept real estate listings, and instead serve only buying clients, so may have an advantage in getting the lowest price for the buyers. Knowing which type of real estate agent is involved can help both buyers and sellers in the home-buying process.
Doug Labor of Buyer's Resource Real Estate in Steamboat, is a local buyer broker. The best way to find buyer brokers, Labor said, is to search online, call local real estate boards or contact the National Association of Exclusive Buyer Brokers.
The next step to being prepared to negotiate for a house is to know what's on the market. By looking at a dozen or so properties, a buyer can feel more comfortable about the property he or she has in mind before making an offer.
"I like taking clients around even if they like the first one we see," Labor said. "Even if they fall in love with it and are ready to make an offer, I think it's good to look at five to 10 other properties so in their mind's eye, they can know there's value in what they're trying to purchase."
A good way to start to learn about properties in the area is to peruse through local newspapers, markets or online resources to get a sense of real estate values.
Another good first step is to get pre-approved to finance the purchase. The pre-approval process helps establish a spending budget and also is more powerful once both buyers and sellers are at the bargaining table. Pre-approved buyers can close on a deal after a few days, instead of having to wait weeks or months.
Once a property of interest is identified, the more information on the property that the buyer can find, the better he or she will be able to negotiate. If the property has been on the market for a long time or if the price has already been reduced, the seller might be more willing to negotiate.
"Whenever I console my clients on certain properties I look at the days on the market for an indication of what we can offer," Labor said. "Brokers should ask why the seller is selling."
It's good to know if there are any other offers, or if and why previous offers have been turned down. Knowing the condition of the property - for instance, if it's being rented or is vacant - helps the buyer choose what offer to make. Information on how long the seller has owned the property and how much they paid for it are available in county records.
The buyer can get a feel for what sort of competition should be expected by learning how long properties stay on the market in the area.
Before making an offer, buyers should consider if the seller is leaving other furniture or appliances behind, and if there are other factors such as termites or crime that could affect the property value.
Two final pieces of useful information are the sale price ratio in the area, as well as the average price per square foot of recent sales in the area.
Labor has been tracking the ratio of sale price to list price since 1999. At that time, sale price was about 95 percent of list price. The ratio rose to a high of 98 percent in the second quarter of 2001, and now has dipped back down, hitting 94.3 percent in the first quarter of 2003.
The key to negotiating for a house is to be informed, and then to stay relaxed and patient through the actual negotiating process. Buyers shouldn't let sellers know that they have fallen in love with a house, and buyers also should avoid bidding wars with other house-hunters.
Finally, the most important part of the negotiating process is to know one's own limits. A buyer should never be talked into spending more then he or she can afford.
