Found the house of your dreams? Now the negotiations begin. The agent you're working with can guide you through the process of making a purchase offer. You'll want to start by learning as much as you can about how much the property is worth. Check the comparables Your agent has up-to-the-minute price data at hand to help you analyze any comparable properties; just ask. Although every home is unique, here's some of what makes a home "comparable" to the one you're considering purchasing: same neighborhood; same age and condition; same size lot; same home style--equivalent living space, number of rooms and baths; similar terms of sale.
Follow sales price ends
Ask about recent pricing ends in the neighborhood. Specifically, what has been the average difference between listing price and sales price for recent sales of comparable homes? What is the ratio of assessed tax value to market value?
Offer what you think the house is worth
Some asking prices have built-in padding, but others are already priced to sell. You could lose a well-priced home with a low-ball bid. Remember, a lower mortgage interest rate will allow you to borrow more and pay a higher price for a home without increasing your monthly payment.
Spell out the details
Consider getting a pre-purchase appraisal and home inspection. The appraisal will give an independent valuation of the house, and the inspection will help identify any potential problems you may have overlooked. Consider including a contingency making the contract subject to a satisfactory appraisal and inspection.
The contract can also be contingent upon an attorney's review, previous home sale, and acceptable mortgage loan terms, etc. Contingencies are typically used to smooth acceptance of an offer without delaying the final decision. Too many contingencies, however, weaken your bargaining position.
Know what's important to you
Prioritize the elements of the sale on paper ("must" and "want") and decide where you have negotiating room--what you'll give up or accept in exchange for a concession. Items frequently negotiated include adjustments for needed or requested repairs, what personal property stays and what goes with the seller, points and closing costs, and move-in date. Knowing exactly what you want and where you are willing to bargain is your most important negotiating tool.
Put everything in the first purchase offer
If the first offer is accepted it may be too late to add anything. Include a financial statement. Do all negotiating in writing with a deadline for a response, often 48 hours. You are free to cancel an offer until it is accepted by the seller. Require that your binder or deposit be held in an escrow account with the interest credited to you.
Negotiating could take several days. Be patient; you won't want to rush into one of the most important purchases you'll ever make.