This is a question I get all the time and even though most home prices are negotiable, we don’t always know by how much. So we have to look at certain factors to determine what a fair offer would be.
The first thing I look at is how long the property has been on the market. If it has been listed a few days the chances are the sellers will not be very negotiable. If it has been listed a long time then there is a good chance that it is priced too high and we may have more room to negotiate.
The second and third things I check out at the same time. That’s the features and conditions. When I’m looking for features I’m checking to see what features it has that contribute or detract from the price. For example: Is there is a master bedroom and if so does it have an attached bath? Is there a garage and if so for how many cars? Is there are a pool and is it in ground or above ground? What is the size of the yard? While I’m looking at the features I’m also looking to see what condition the property is in. Is the kitchen new? How about the bathrooms? What types of flooring are there? Does it look like its been taken care of? If it is in good condition and has a lot features that appeal to buyers in that price range then we won’t have too much room for negotiation. If it needs updates and has been on the market a while then we have more room to negotiate.
I also look for notes from the listing agent. Not all of these will be shown to you as a buyer. Many are in notes that only real estate agents can see. Keep an eye out for remarks that indicate the seller needs to sell quickly For example: “Bring all offers” or “motivated sellers” or “owners relocating.”
The other thing to look for is whether or not it is a short sale or a foreclosure? If it is one of these two situations then the bank will need to approve the price. It is usually difficult to negotiate with the bank.
So, how much can you negotiate the price?
Once we have all this information we need to compare it to other houses. You’ll be able to look at houses that are currently listed for sale. If this house is in better condition than similar properties then it will usually command a higher price. If it needs a lot of updating when compared to similar properties then it will usually command a lower price. This gives you a good starting point. When you’re ready to make an offer you’ll need to compare this house and its price to other houses that have already sold.
How does this affect the way I search online?
What most people don’t realize is that because prices are negotiable you should set your maximum price slightly above your price range when you’re searching. For example if you want to spend $400,000 on a house then look up to about $415,000. Once you negotiate the price you may wind up spending about $400,000.
When are prices NOT negotiable?
One case that I can think of where prices aren’t negotiable is in new construction developments. Homes by large builders in developments are typically not negotiable. They are usually a base price and then you can add of your finishes and features at additional prices. Builders will sometimes offer discounts if a home is already built or even in the pre-construction phase but the prices are still set by the builder.
There are other times when the prices are “technically” negotiable but the sellers or the bank are unwilling to negotiate and there is a standstill.