Try to line up data on at least three houses that have sold recently in the neighborhood. Calculate the difference between the original list price and the final price of the homes sold. If the average difference is, say, 5 percent below the asking price, then you know you can make an offer 8 percent to 10 percent below, leaving yourself a little room to negotiate. If you really want the house, don’t lowball. The seller may get insulted and/or give up in disgust.
There’s no foolproof system for negotiating a fair price. Be creative about finding ways to satisfy the seller’s needs. Remember, too, that your leverage depends on the pace of the market. In a slow market, you’ve got muscle; in a hot market, you may have none at all.
Once you reach a mutually acceptable price, your agent will draw up an offer to purchase that includes an estimated closing date (usually 30 to 60 days from acceptance of the offer).
A good agent will make your purchase contingent upon:
- your obtaining a mortgage, and obtaining it at a desirable rate;
- a home inspection that shows no significant defects (make sure you’re clear on the definition of “significant”);
- a guarantee that you may conduct a walk-through inspection 24 hours before closing. This last clause allows you to check the home after the sellers have moved out so that you have time to negotiate payment for repairs, just in case the movers cause any damage something, or damage shows up after items are moved out, etc.
About two days before the actual closing, you will receive a final HUD Settlement Statement from your lender that lists all the charges you can expect to pay at closing.
Review it carefully. It will include things like the cost of title insurance that protects you and the lender from any claims someone may make regarding ownership of your property. After all this rigmarole, the actual closing should be nice and smooth.