Home Prices – How to Find the Best Deal when Buying a House; Part 2
Military VA Loan interviewed Realtor® and veteran Ed Kunkel, Jr. about home buying strategies. In the second installment of this three-part interview, Ed talks about negotiation, making offers, and paying the right price for the home.
MVL: In what circumstances should a buyer make an offer that’s lower or higher than asking price?
Ed: There is usually a distinction between a home’s asking price, versus true market value. When there’s doubt about a home’s true value, I use the same resources that appraisers use and advise my client of the results accordingly. If a home is overpriced, I would ask the question: Would this home be the most suitable for my buyer’s needs with a more reasonable price? If so, I then I look for ways to appeal to the seller’s triggers, and help my buyers make and secure a reasonable and fair offer.
On the flip side to that coin, if there’s an undervalued home on the market that my buyers want to buy, I will quickly advise them on their options. Purchasing an undervalued home usually involves competing with other buyers and could even mean offering more than the asking price. But, there’s a way to navigate through that without offering more money than you have to, in order to secure the purchase. A skilled buyer’s agent knows how to do that.
MVL: Negotiation can make the difference between a good deal and a not-so-good one. Can you give us some insider tips on price negotiation strategies?
Ed: First tip – Don’t get emotionally attached to a home until your agent hands you the keys!
Second tip – How you carry yourself and how you’re perceived when you’re negotiating can carry a lot of weight in your favor. If you are able to give the impression to the seller that you could easily walk away and look elsewhere, the “NO” you received on your inspection response could possibly turn into a “YES.” That being said, if your attempts to negotiate become unreasonable and onerous to the seller, you could just as easily negotiate yourself out of the sale of a home that you would have otherwise loved to have owned.
Third tip – Keep in mind the emotional impact this sale might have on the seller, and how the impression you give might help you benefit from it. Just as you want to fall in love with the right home, the seller also has a picture in mind of “the right buyer” for their home. They want to know that the home they raised their children in is going to be appreciated by someone that shares their sentiment. It’s very likely that when you’re out looking at a home, the seller is watching you from a distance, so be mindful of how you might appear to the seller. This could help you immensely when it’s time to negotiate.
MVL: Has a price negotiation tactic ever backfired?
Ed: Yes, and it’s always a possibility. Keep in mind one constant truth about this and any market – while you decide to go home and ‘sleep on it’ before making a decision, someone else did that yesterday and are now making a decision to buy today. It’s bound to happen – you find ‘the one’, negotiate on price and/or concessions, and someone else with a higher offer gets it before you do. But the bright side is that you will find something else you can appreciate just as much or better – hang in there!
MVL: Buying a home is an emotional undertaking. Can you tell us a story about when a client sacrificed getting the best price because they “fell in love” with the house?
Ed: It’s a rare occasion that I hear of someone ‘overpaying’ for a home. This may have been true during the days of stated income loans and overinflated housing values (which contributed to the market crash), but none of that applies to the market now. Most of the clients I serve are subject to financing their purchase, which also means they need an appraisal. If a home appraises at less than the purchase price, the loan will not fund unless the buyer pays extra out of pocket, or the seller brings the price down.
What usually happens in this scenario is either the seller brings the price down to match the appraised value, or the sale simply falls through and the buyer moves on to find something else. But, to attempt to answer the question – I have had buyers decide from their own search experience that it’s better for them to not ‘dicker with the sticker’ in their purchase, because they are confident in the value of what they have chosen, and don’t want to risk losing the home that absolutely fits their needs and wants.
Ed Kunkel, Jr. is a Managing Broker/Realtor® at Keller Williams Realty in Olympia, Washington. He has been an active real estate professional since 2000 and loves to help people realize the American dream of homeownership. In Ed’s own words, “It’s a rewarding experience for me to be a trusted part of one of the biggest financial and personal decisions people make.” Visit Ed here.
Ed’s Military History: Veteran – U.S. Army and Air Force Reserve; Highest rank, E5; 11 years combined military service.