Buyers who fixate on purchase price and mortgage size often overlook opportunities to save money on both.
Usually, the lower the purchase price, the smaller the mortgage a buyer must borrow. We’re not suggesting that buyers buy less or resort to trickery or pressure to arrive at an attractive lower purchase price. Nor are we suggesting a price chopped by tens of thousands. Instead, by adding value to the components of an offer, a lower purchase price may be acceptable to the seller.
Market value is not one price; it is represented by a price range. This means a property can sell at market value at any price across this range, especially when the offer is taken as a sum total of value for theseller, not just at its stated price.
By thinking ahead and being prepared, buyers can significantly improve their bargaining position with sellers.
Below are five smart value strategies to ensure the entire offer to purchase has value to the seller beyond the purchase price.
Five Smart Value Strategies to Win Sellers Over
Match Seller Closing Date
Prepare for home buying by becoming as flexible as possible about when the transaction closes. If you offer to match the seller’s best closing date, you may be saving them from incurring significant cost. Even the difference between popular moving dates and lower-fee moving dates can represent value for sellers. This savings may be reflected in a lower selling price.
If you’re renting, check out your lease options so you know exactly how much it will cost you to close in 30 days, six months, or whenever suits the seller’s needs. If you have a home to sell, consult your real estate salesperson to determine whether to sell or buy first. If the latter makes more sense in your market, get numbers on bridge financing, that is, the cost of owning two homes at once, so you know, in advance, exactly how much closing-date flexibility you have and what’s at risk. Obviously, if family or friends can help with temporary housing, furniture storage, and/or financing, you may have an advantage over other buyers.
When faced with the immediate equivalent to cash – a firm,
no-conditions offer to purchase – a seller may be tempted to accept a lower purchase price than if the offer is full of “ifs” and “maybes.” Conditions for financing, home inspection, and other significant concerns beyond the buyer’s control cannot always prudently be removed, but when they can, buyers benefit. Paying for a home inspection before making an offer or arranging lender commitment in advance can provide a buyer with bargaining leverage.
Don’t Ask for More
Avoid including appliances, light fixtures, furniture, or other items not automatically and legally considered part of the house, townhome or condominium. Since appliances no longer last the decades they used to, it does not make much sense to purchase them, or any other furnishings, second-hand through your offer. By including them in the purchase price, buyers may end up paying mortgage interest on these furnishings for decades. On the other hand, selling used appliances and furnishings online is easy for sellers who end up with cash in hand.
Personalize the Offer
Sellers who love their home see value in buyers who “get” the property and who may even plan to realize a dream sellers had, but did not complete. Providing details in a letter, short video, or photos about why purchasing the seller’s home is important can also add weight to your offer.
Personalize the offer and emphasize why you can and will close as promised. Sometimes, sellers can be won over by offering something of value to them that is uniquely available to the buyer.
For instance, one experienced restauranteur/buyer offered to cook and serve at a dinner party hosted by the seller. Your real estate professional may have suggestions about what would sway sellers and add value without overly complicating the real estate transaction. Which service, experience, or convenience do you have access to that would represent value and savings to a seller?
Market value is represented by a price range, which means a property can sell at market value, and be sold at any price across this range. Further, when the offer is taken as a sum total of value for the seller, emphasis is taken off the purchase price. An experienced real estate professional understands these concepts of a market range value and the sum total value of a property. Take the time to engage a strong professional negotiator who can convince sellers how the buyer’s lower purchase price represents full value to the seller.
Strategist PJ Wade is an author of eight books and more than 1800 published articles, PJ concentrates on the knowledge, insight, and special decision-making skills essential for the professionals and their clients who are determined to thrive in the 21st-Century vortex of change.