When you’re shopping for a new home, do your research to know what prices are fair and reasonable. Being informed gives you the most negotiating power, enabling you to get the best deal on the property you want. Compare prices of other for-sale homes in the area and similar homes that have sold recently. Is the property you like within that range? If it is, and that range matches what you can afford to buy, you’re ready to make an offer.
If, however, a property is priced significantly higher than other homes in the area, has been on the market for a long time or doesn’t account for current market conditions, it is probably overpriced. What should you do?
1. Don’t Ignore It.
A common reaction to overpriced properties is avoidance. As a buyer, you may be tempted to overlook high-priced properties, thinking they’re out of your buying range or that the sellers will be unwilling to negotiate. But what you don’t know is that other buyers might be thinking the same thing! If an overpriced home is getting no attention, showings or offers, a fair offer is sure to be noticed.
2. Make an Offer Based on Research.
If you do decide to make a lower offer, keep in mind that it should be backed up by data, so as not to offend the sellers. Use the research that revealed the price to be inflated in your mind (market conditions, other for-sale properties in the area, similar homes that have sold within the last three months) when presenting your offer. Remember, this isn’t about tricking the seller or getting away with a too-low price, either! If you’re fair with your offer, motivated sellers should be willing to consider it.
3. Consider Ways to Sweeten the Deal.
Negotiating isn’t only about price. For other incentives to the seller, which could make a lower-than-expected offer seem more amenable, consider making an offer with no contingencies or an offer with a large earnest-money deposit. Using these seller perks to your advantage may show the sellers you’re serious and encourage them to evaluate your offer.
Bottom line: In today’s market, research pays off! Know your stuff, and you enjoy the most negotiating power and leverage in a discussion of price. Be prepared to negotiate with the sellers of overpriced homes, and you could find yourself living in your dream home!