How to Negotiate the Price of a House

How to negotiate the best price possible before buying your next home.

Small model house on top of a pile of 1 dollar bills.

For many people, buying a home is a momentous event and a milestone in adulthood. It's also a serious investment. On average, our home is the single most valuable asset most of us own.

All of which makes negotiating the best price possible that much more important. Too many people, however, enter the process flying blind, or relying entirely on the expertise of others.

That's not a recipe for executing a successful deal. Yet by using some smart negotiating tactics, you can secure the house of your dreams at a more than fair price.

That's an outcome that should excite just about anyone. So let's talk about how to negotiate the best price possible before buying your next home.

Ignore The List Price, Focus On The Value

When looking for a home, most people tend to focus like a laser on the list price. Yet your offer should be based on the actual value of the house, rather than the seller's opening price gambit. Check out the comparable homes in the neighborhood and consider ordering a market analysis to support your bid.

Get Everything In Order Before Making A Move

It's difficult to negotiate from a position of strength if your financial house isn't in order. Secure mortgage pre-approval before making an offer, as many sellers won't take you seriously otherwise.

Use Online Tools To Conduct Basic Research

Sites such as Trulia or Zillow offer great information about the history of properties in which you're interested. You can discover when the house was sold, how much it sold for, foreclosure history, relevant data about the neighborhood and schools etc. -- precisely the sort of information you need to formulate an appropriate bid.

Don't Hesitate To Come In Low

If a seller accepts your first offer, you'll never know what might have been. The worst any home seller can do is say no. Be forewarned, however, that you shouldn't waste a seller's time with an obviously poor offer. You may also want to offer a second bid quickly. You don't want to lose the house because your opening offer was summarily rejected.

Personalize Your Offer

If you have a compelling personal narrative, it might make the difference between the seller accepting your bid or someone else's offer. Writing a letter to explain how much the house would mean to you and your family is a graceful way to personalize the interaction.

Negotiate More Than Just Price

If the seller won't budge on price, open up negotiations on home furnishings, closing costs, form of payment, contingencies or any other area that could help a deal get made.

Remove Passion From The Equation

This is really difficult for some of us to do -- especially first time buyers, who often radiate enthusiasm for their desired properties. Picking out a home is an exciting event. Yet just like in poker, you don't want to let your emotions compromise your position.

Don't Take A Bad Deal Because You're In Love With A Specific Property

It's tough to walk away from a house that you really love. Yet that's exactly what you need to do if it's a bad deal. There are plenty of great houses out there -- don't let your overwhelming desire for just one of them short circuit your negotiating strategy.

The Takeaway

Buying a home is often thrilling, yet it's important to keep your emotions in check when negotiating your best price. By following the steps listed above, you'll improve your odds of securing your dream home -- at a dream price.