Tips for the First Time Home Buyer: Negotiating Like a Pro

If you are a first time home buyer, you are a novice in the field of negotiating the best home price.  If you want the best loan, you need to consider the fact that a home is a financial and personal investment. Keeping this in mind will help guide you to the best pricing options.

Don't Get your "Heart Set"

First time home buyers often fall into the trap of thinking there is only one house that will make them truly happy. In actuality, there are usually a number of homes that will be right for a buyer. Every home will have pluses and minuses; the key is to remain flexible. Not getting “your heart set" on a home is one of the most difficult things to do when you are a first time home buyer, but it helps you to confidently walk away from a bad deal.

Use a Good Real Estate Agent

A real estate agent is your best weapon against the seller's real estate agent. The home buying process is complicated, and without the proper, licensed agent, you will fail to secure the best deal. Ask for recommendations from friends. You may also ask local government organizations, such as the local office of your Federal Housing Authority, to recommend agents for first time buyers. Your agent should have your best interest in mind and be sensitive to your needs and requirements.

Use Market Comparables

The best indication of what your home is worth is how much another person is willing to pay for a similar home. A real estate agent will have access to a list of recent home sales. This list will show the specifications for the homes in the immediate vicinity, like numbers of bedrooms and baths and sales price. This report can tell you if the home you are considering has been priced appropriately.

Be Flexible with Options

There is more to buying a home than simply looking at the overall price. There are a lot of options you can use to make the purchase work for you. There are many gray areas left for negotiation that can add up to a tremendous amount of savings. For example:

  • Closing costs: You can ask to have the seller cover the cost to close, which is typically 3-5% of the home's value
  • Inspection: You can ask the seller to pay for important inspections, such as the home inspection.
  • Home warranty: You can ask the seller to pay for the entire warranty, or a portion of the warranty.
  • Seller can include furniture, appliances, drapes or barbecues to help save you money.

Consider a Mortgage Buy Down

Instead of having the seller reduce the price of the home, ask the seller to buy down your mortgage. This option has the seller pay a portion of the interest on your loan for the first few years. While the sticker price remains the same, you will find your home is ultimately much more affordable when you need the boost the most. A lower sticker price will only save you fifty or one hundred dollars a month while a buy down could save you five hundred to one thousand. Affordability is the number one concern with a mortgage, not the total price.