Negotiation & Home Ownership

Learn why you must negotiate effectively when buying and/or selling your home…

It is important that you realize that there are buyer’s and seller’s markets that occur on an ongoing basis. And it is important that you know if you are in a buyer’s or seller’s market when you decide to buy or sell your home.

The importance of knowing that information is tied to how you can more effectively negotiate a deal that will work for you and your family. When negotiating a sales contract always be aware of “time constraints” as they play an important role in any negotiation–and even moreso when buying and/or selling real estate.

In this discussion TheWealthIncreaser.com will present practical negotiating tips that you can use if you anticipate buying or selling your home–now—or in your future.

HOME BUYER NEGOTIATING TIPS

If you are buying a home there are many options that are available including creative financing.

Always realize that a cash purchase gives you the most negotiating power generally speaking when you are presenting an offer to a seller!

You can use a cash offer with a higher earnest money down payment and a shorter due diligence period to put your offer at or near the top of most seller’s consideration when you are in a seller’s market and the seller(s) are receiving multiple offers on the property.

Generally, you want to be prepared to pay the closing costs (they are usually low because no lender is involved) when you present a cash offer.

When financing is obtained to purchase your home you will have to select a lender and include a financing contingency in the offer contract and negotiate the closing costs. As a buyer you should be aware that there are mandatory seller closing costs (scroll to the bottom of this page for a sample) and there are closing costs that can be negotiated out with lenders and/or negotiated to be paid by the buyer(s) or seller(s).

In a “buyer’s market” you will have more flexibility in your offer as there will be an abundance of homes on the market that may fit your and your family’s needs and if an offer is not accepted you can move along to another similar property that is on the market.

As a buyer you want to control the negotiating process so that you can maximize the transaction to your advantage, but also make it a winning situation for the seller(s) as well.

Your end goal is to “close on the property” and make the purchase a win–win situation for all parties involved.

HOME SELLER NEGOTIATING TIPS

If you are selling your home you want to select the offer that nets you what you want or nets you the closest to what you want with a high likelihood of closing in a desired time frame.

A cash offer with a higher earnest money down payment and a shorter due diligence period will normally be selected over other offers that may require financing or have longer due diligence periods. A cash offer contract that is submitted with a “proof of funds” letter will carry more weight than one that does not contain a “proof of funds” letter.

A financing offer contract that is submitted with a “pre-approval” letter will carry more weight than one that does not contain a “pre-approval” letter–generally speaking!

When financing is to be obtained in the offer by the purchaser you will have to ensure that the buyer can obtain a loan with the lender outlined in the offer contract (verify loan commitment) and make sure the financing contingency and other contingencies in the offer contract are met–and negotiate the closing costs to an acceptable level so that you can net the proceeds that you desire.

There are mandatory seller closing costs and there are closing costs that can be negotiated out (scroll to the bottom of this page for a sample) with buyer(s) and/or lender(s) and/or negotiated to be paid by the buyer(s) or seller(s).

In a “buyer’s market” you will have less flexibility in how discerning you can be with offers as there will be an abundance of homes on the market that may fit a buyers needs and buyer(s) may move along to another property if you do not accept their offer or delay in accepting their offer.

As a seller you want to control the negotiating process so that you can maximize the transaction to your advantage, but also make it a winning situation for the buyer(s) as well.

Your “end goal” is to “net the proceeds” that you desire or need to receive when all is said and done (when closing is complete).

Conclusion

When buying or selling your home, negotiation is critical and you must know what is involved in the process upfront—not in the middle of the transaction. Even who chooses the closing attorney is negotiable in some cases depending on your locale and custom.

The costs below can give you a feel of what you might have to pay at closing if you are a buyer or seller depending on how negotiation occurs and local custom in your area.

HOME BUYER & HOME SELLER CLOSING COSTS IN GEORGIA

S = “Seller” required to pay–otherwise negotiable

GA Residential Mortgage Act Fee $10

Intangibles Tax based on value–$3 per $1,000 and $1.50 per $500

Transfer Tax based on loan amount $1 per $1,000 and .10 per $100 S

Real Estate Taxes (pro-rated to S)

And Record Deed $12+ Trust/Deed Mortgage $44+

Commission usually 6% in GA but negotiable S

Credit Report $40+

Appraisal $450+

Underwriting $895+

Homebuyer Education $25-$100

Impounds (usually 3 months but depends on lender and loan type)

Insurance (POC or at closing)

Interest (prepaid—remainder of month of loan buyer pays)

Property Taxes (pro-rated)

Title Charges:

Settlement $700+

Insurance–lender & purchaser $300+

DOC $100

Examination $250

Binder $50

CPL (Closing Protection Letter) $50

Courier Fee $50+ New Line

Other:

SURVEY–$500 and up

TERMITE LETTER/TREATMENT–$75 and up

SPECIFIED INSPECTION–$100 and up depending on scope (i,e pool, plumbing/septic system, mold and mildew, radon, lead-based paint, electrical system, other environmental concerns etc.)

Maximum Seller Paid Closing Costs: FHA Loan 6%–VA Loan 4%–USDA Loan 6%–203k Loan 6%–Conventional Loan 3%

As a buyer or seller you must also factor in the tax consequence of your home transaction and it is important that you know that information upfront as well.

Even though it is not required (you choose a highly competent buyer real estate agent to represent you or you choose a highly competent seller real estate agent to represent you) that you have the knowledge that was discussed above—it is important that you know that the buying and selling of your home is a major transaction and it is important that you know what is going on—or should be going on every step of the way.

Whether you are purchasing or selling a new home or a resale it is important that you know the type of market that you are operating in and you (or your agent) do your research upfront as that will help in the negotiating process.

By looking at past sales, expired listings, and the current market conditions in your area, you (along with your real estate agent) can craft an offer that works for you whether you are the buyer or the seller–regardless of market conditions and the type of property in question.

Always realize that all home loan closing situations are unique and variations to expected closings occur on a consistent basis!

Whether you are a buyer or seller always pay attention to special stipulations and the seller’s home disclosure statement when present in an offer and always consider a home inspection as well!

In addition, whether cash or a loan is involved in the transaction “you must negotiate in a manner that works to your advantage” as you move forward and pursue the goals that will make life on earth more rewarding for you and your family in a more sincere way.

Thanks for visiting TheWealthIncreaser.com today!

All the best to your negotiating success…

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