June 16, 2006: Win-win deals are best for home buyers
Here's a question that should be uppermost in every home buyer's mind:
"How low can I go on price and still get the house?"
The answer: Things are better than they were, but they're probably not as good as you are expecting.
Yes, you can offer less than full price and probably make a deal. Yes, you can ask for the seller to pay some or all of your closing costs. You may even be able to do both, within reason, if the seller is strongly motivated.
But there are some caveats:
- The seller may not be very strongly motivated. There are a great many homes for sale right now, but a certain percentage of sellers will accept a contract only if they get their price. If they can't, they'll cancel the listing and sit tight.
- Even if a seller has a genuine need to move on, if that need is not immediate, the seller's motivation to act will be tempered by hard arithmetic: If your offer is $5,000 under list, and if the monthly carrying cost of the home is $1,000, then the seller can afford to wait five months before your offer is profitable.
- You need to be fair to the seller on the way in if you want the seller to be fair to you on the way out.
You might find a highly motivated seller who will give you closing costs plus a deep discount on the list price. But will that seller be eager to address your repair issues? What if your lender is late with the funds? If you have beat up the seller every way you could think of, will he or she look with fondness on your request for a contract extension?
In truth, it's a great time to buy a house. You have a lot of fine homes to choose from, and many sellers are eager to make deals.
If you negotiate win-win, you can save on price and closing costs and still have a seller who is forthcoming with repairs and flexible about last-minute issues.
Greg Swann is the designated broker for BloodhoundRealty.com, a full-service Metropolitan Phoenix real estate brokerage. This article originally appeared in the West Valley regional sections of the Arizona Republic.
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