So when exactly does the primary negotiation when purchasing a home take place? Quite simple actually, it takes place when the contract is signed and agreed upon – including the price, closing date and when possession will take place. One issue especially over the past year is inventory was down 19%, which made multiple offers a normal circumstance. The first round of negotiations can be challenging, and definitely proved to be so during the last year.
There’s always a sense of relief once it’s resulted in an agreement, but experienced agents such as myself know that there is more to come such as contingencies for financing, inspections, or other things. The competition for the home may be so tough that the buyer waived their rights for what would be normal contingencies.
One of the most common contingencies is financing, but when multiple offers are involved, cash offers tend to have the advantage. If you don’t have the resources to make a cash offer, the next best position is to be pre-approved with a commitment letter from the lender. You can even arrange for the lender to confirm the pre-approval directly with the listing agent prior to the listing agent presenting the offer.
Of course there have been buyers who know they don’t have the cash to close, yet they apply for a mortgage anyway and try to reinsert the provision outside of the contract. Experienced listing agents will advise the seller to have the buyer provide proof of funds necessary to close and verify that they do indeed exist.
If you purchase a new home from a builder, of course it’s expected for everything to be in working order. Let’s face it – it’s new! However, it’s expected and reasonable with existing homes, in other words, homes that are not new, to have a different standard. It’s very understandable that buyers would want to know about major items that are not in “working order”, but normal wear-and-ear of components based on age should definitely be expected.
In today’s highly competitive seller’s market, buyers might try to do whatever they can to get their contract accepted – and even realizing that there’s another place to negotiate when they’re not competing with other buyer’s offers.
The negotiations involved in a home purchase are not complete until the buyer and seller have signed the papers and the title has passed to the buyer. Up until the closing is finished, any item that comes up could prolong the negotiations.
For this to be a WIN-WIN situation, both seller and buyer must feel good about the negotiations that led to transaction closing. Neither party should feel that the other party had an unfair advantage over them.
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