How To Negotiate $5,000 to $50,000 Off Your Next Home

How To Negotiate $5,000 to $50,000 Off Your Next Home - picture of man handing woman keys to new house

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Please enjoy this guest post from Jonathan Cowan. Jonathan is a sushi-loving freelance writer who specializes in personal finance, investment and trading.

Buying your next home will be emotional. You can count on it. And for the majority of you that means you’ll end up paying more than you should.  It’s all too easy for real estate brokers to exploit this weakness we all have. But it doesn’t have to be this way. Armed with a few simple tactics, you can play the game as well as any broker, secure your dream home and get a fantastic deal in the process.

But beware, the negotiations start the minute you contact your first broker. Read on to find out what to do and how to do it so you don’t pay a penny more than you need to with these simple steps.

Preparation Is The Key

The first step is knowing your spending limit and where the money is going to come from. Look into all the possible sources of money and the best deals you can find on loans.  There are 3 things you want to be sure of:

  • The maximum amount you can borrow
  • The maximum amount you can afford
  • How much you would prefer to spend

Number 1 is for your information only. No broker should ever know this number. Number 2 is your absolute top deck reserved for that extra special home that you simply have to have. Number 3 is what you’re aiming for.  These numbers are the bedrock of your negotiations later on. It’s going to be emotional but this will keep you grounded – don’t be drawn into buying a home you simply can’t afford.

Before you pick up the phone to a broker you should know exactly what you’re looking for. Number of bedrooms? Check. Distance from schools and amenities? Check. Size of garden? Check. And whatever else is important to you.

Then research the local market for asking prices and, more importantly, prices sold. Websites such as make this easy to do. You’ll get a feel for what you can afford and be able to take charge when requesting viewings.

Sound too obvious to you? Maybe so.

Knowledge is power and when you’re mid-negotiation you need to be confident that the price you’re offering is a fair one. It’ll be hard for a broker to counter a savvy buyer who is well informed.  Armed with this information you’re ready to make contact with brokers who are listing the types of home your research has led you to.

Before you do, remember that behind the charming exterior and gleaming smile of every broker is a savvy dealmaker set on selling property at the highest price possible.  The broker isn’t evil, he or she is just doing their job, but they’re not your friend either. Would you prefer they get a better pay check or you protect your hard earned wealth?

You have to play to win and may the best person do so.

How To Deal With The Broker

There are two golden rules when dealing with a real estate broker:

  • You’re always negotiating
  • The broker (and the seller they represent) need you more than you need them

Stay focused and give as little away as possible about what you’re thinking and what you’re feeling, allof which can be used against you when it’s time to negotiate.

When you’re with the broker, put your business face on. Be nice. Be courteous. Don’t act like you’re going into battle. But give nothing away.  They’ll want as much information from you as possible. Good salespeople are excellent at asking questions. But you’ve done your research and you know exactly what you want. So only reveal what you need to.  And when the killer question comes about your budget tell them a figure 10% below your comfortable spending limit or give a range around that level.

The next killer question is ‘Why are you buying’? They need to know what’s motivating you. Make it clear you’ve been looking for a while because you like the neighborhood and are considering buying within the year – but will move quicker if the right home is available.

Whatever you do make sure you don’t reveal any urgency. Negotiations will come to an end as soon as you do that.

Make sure they know you’re serious. This is where your goals do align. Salespeople hate time-wasters. So make it clear you’re not. If they show you the right home at the right price you will buy.  Keep them aware you’re using other agents. If there’s one thing salespeople hate more than losing money it’s losing to someone else. This will help you recruit them to convince their client your offer is a good one.

You want to buy a house and they want commission. Until you absolutely walk away or someone else buys the house there’s always a deal to be done.

How To View Property 

Turn the tables and try to get as much information as possible about the seller. Double check their asking price. How soon do they want to move? How long have they lived there? What repairs have been done? If you spot faults ask about them. You need to find an edge that you can use during negotiation.

If you detect a need to get out of the property, your position has been strengthened. If the owners have been resident for a long time it’s possible they have lots of equity and lower offers might not seem so bad to them.  Allow the broker to highlight the good features of the house but stay neutral in your opinion. And whatever you do don’t give anything away about your thoughts about the property. As soon as the broker knows you’ve fallen in love with the property, it’s game over.

Treat every viewing the same. Same questions. Same emotional response. You want to keep the broker on the back foot – the longer they have to deal with you the more impatient they’ll get in wanting to get some sort of deal done.

You’ve Found Your Dream Home

You’ve found the home of your dreams and the broker is having a difficult time knowing what you’re intentions are. But you have to break cover at some point. And that’ll be your second or third viewing.  The broker will sense this could be the one so make your last viewing a long one. The longer time goes on the broker will have to ask you whether you want to put an offer in. This is critical – never make an offer without being asked for one. You need to stay in control.

Never make the offer there and then – go home to think about it. Expect a mythical buyer who’s desperate to buy to suddenly emerge. Call the broker’s bluff and leave. This is a classic tactic you shouldn’t fall for. Even if there’s a potential buyer, the broker still asked for an offer from you so there’s still a deal to be done. Don’t be pressured at this point.

Go home. Double check you do want the house and formulate your first offer. And it must be a low one – around 15% lower than the asking price. This will test the seller’s resolve and gives you lots of room to move up.

But when you make that offer you must justify it – i.e you think it’s a fair price compared to similar houses in the area.  Attach wide conditions like a long completion time. You can always concede on this late in the negotiations.  If your initial offer is turned down (which is probable) always wait for a counter offer. Your response is to then raise your price but by small increments less than any increment they move towards you.

Never agree to split the difference – this has the effect of making your offer jump too much. Stick to small increments – you’re edging your way to the point where the seller will accept.

Each offer needs to be justified to prevent the broker pressuring you:

  • you’ve spoken to your partner (could be spouse, adviser, parents) and they’re not comfortable with paying more
  • you’re still convinced your offer is fair value
  • you have two other properties in mind which will be cheaper.

And always be reluctant to move up in price. You’re the buyer. You’re doing them a favor.  You can always come back and say you found the money if you really want to revive the house purchase.  This may seem confusing or too much to take in. After all, many people don’t have much experience in negotiating. And some might be too impatient. But the results can be very profitable.

If you manage to get 10% off of a $500,000 property you’re saving $50,000 dollars.   So if you want to pay not a dollar more than you have to try employing some of these tactics for your next home purchase.

How have you saved money on home purchases? 

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  1. We just got a home for more than $25,000 less than another person’s offer. We had everything prepped and all financing together. So we offered a quick close that was virtually guaranteed. All we wanted was an inspection. The seller was happy to knock over $25,000 off the price for the virtual lock for closing.

    1. Jonathan Cowan says:

      Great result Nick. The seller clearly needed you more than you needed them!

  2. When we bought our home we put a low offer in looking to open communication and they accepted it! They really needed to move, fast and hadn’t had an offer in weeks. Sometimes you never know!

    1. Jonathan Cowan says:

      Absolutely Catherine – and that’s a key to investing in property also…finding motivated sellers who need to move quick. Virtually guarantees a great deal.

  3. Oh my goodness, how I wish we would’ve had this info when we bought our last home!!!! We fell for all of the classic mistakes listed above, and got ripped off in the process. Thank you, Jonathan, for sharing this very important information. We won’t make the mistake of paying too much ever again!

    1. Jonathan Cowan says:

      In my early days of buying property I fell for all the tricks also! That’s why I ended up studying negotiation tactics to get a better deal. I hope the info comes in handy for the future.

  4. Great tips. I was thinking as I read your advice on waiting to be asked for an offer that the process can be a little bit like dating- never let them know on the first date how incredibly interested you are- it can come off as a little desperate. Desperate in the dating world means you’re not going to have a second date, and desperate in the real estate world means you’re gonna be paying more cuz they know they’ve got you where they want you!

    1. Jonathan Cowan says:

      lol – there’s a blog post idea in there Dee! The ‘rules’ are probably quite similar – business deals are a form of courtship (without the romance of course)

  5. My wife and I are looking for a co-op in NYC (Queens). I think that I was very prepared and very focused in the search, we found one that we liked, though we didn’t fall in love with it. We made what we thought was a fair offer based on the comparable sales of similar properties within the last year. After some negotiations, we were $10,000 apart. I didn’t budge since I’m not in a hurry to move and it was a relatively new listing, but sellers weren’t in a hurry either. Being that it was around Thanksgiving with Christmas coming…it was winter, I figured, I could afford to wait it out. I was some what right. The seller came back and split the difference, dropping the price by another $5,000. We accepted the weekend of Thanksgiving. BUT…another buyer swooped in, raised the price, we decided not to get into a bidding war. Part of me thinks that we should have been more aggressive…the sellers price was reasonable, but I thought I could get a better price. Well I was right…except waiting might have backfired on me. Not much inventory in the winter, so we’ll see if more comes out in the spring.

    1. Jonathan Cowan says:

      If you can establish there is a genuine buyer then you have to make a judgement call as to whether you really want to get involved in a bidding war. For me, we’d only do it if we were completely and utterly in love with the property with nowhere else in the world we’d rather be. Sounds like that wasn’t the case for you.

  6. We were able to get $3k extra off of our negotiated price after the home inspection by trying to make the seller fix a few of the issues that came up in the inspection. They were all minor things, but because the seller didn’t want to be bothered with it they offered us a $3k closing credit instead.

    1. We did this as well when we bought last year and we also got $3k at closing. My lawyer was great at negotiating and dealing with a difficult seller more so than my realtor.

      1. We got a whole new roof after the inspection! The roof was all messed up on one side of the house so it was nice to get that included in our offer.

  7. We purchased our first home 1.5 years ago. The prices and interest rates were very low for our area. We found a house but it will need some TLC over the next few years. The sellers were pretty difficult and it took us about a week to agree on a price. We paid full asking price but they paid closing costs. I still feel like we got a pretty good deal.

  8. When I bought my first condo, I bought it without a Realtor since it was a friend of my dad’s. Also, the guys wanted to sell it quickly, so I got the condo with about $40k in equity. It was a pretty sweet deal.

  9. We bought our first home about 2 years ago now, and since it was a HUD home, we didn’t really have another party to negotiate at. It was being sold at tax appraised value, which is well below market cost, so we submitted a bid for the asking price and it was accepted! But, since we are going to be moving in a few years, these are some tips I’m definitely going to have to keep in mind!

    1. Jonathan Cowan says:

      Hi Ryan – this is similar to the UK where repossessed homes go to auction or are listed by agents at low prices to clear. If anyone studies the process and can find a property they want then the deals can be outstanding.

  10. When we bought our home, they tried to play with us and tell us they had another offer on the house that was better than ours. We knew that they obviously didn’t actually have a better offer, otherwise they’d just take it and we would be looking still. We told them that we couldn’t beat this “other offer” and said we were going to back out. At the end of the day they came back saying that the other offer was actually contingent on the sale of the buyer’s home, and they couldn’t wait that long so they took our lowball offer.

    We just took advantage of a weird market to get our home for much cheaper.

    1. Jonathan Cowan says:

      Hi Daisy – there you go! Always a deal to be done if you can recognise the signs.

  11. I’m comfortable disclosing a lot of information to my agent. They have a fiduciary responsibility to you.

    One thing to consider is a lot of people list their property for fair market value, or just below. I’ve paid more than list price and I’ve sold homes for more than list price. A “good deal” on a home is hardly judged by how much you save off of asking price. Just my opinion [….]

  12. We fell for all the tricks too when we bought our home.
    Mind you, we got it for cheap and it was well within our price range as they had recently dropped the asking price by 40k, but we were so desperate to get out of our living situation at the time that we chose to forgo a home inspection.
    In the last 2.5 years since buying, we’ve had to jack up and level the foundation, replace the roof and half the insulation in the outside walls on top of cosmetic updates.

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