The housing market continues to be affected by elevated mortgage rates into 2024. In 2020 and 2021, when rates averaged 3.20% and 3.06%, homeowners opted to stay put and maintain their historically low interest rates. Many homebuyers are looking for ways to save money on their home purchase due to the housing shortage and high mortgage rates.
High-rate environments may make it more difficult to secure a mortgage at a lower rate. There is no doubt that the uncertainty of the economy is causing many lenders to tighten their lending practices. Many homebuyers are already facing high costs to purchase a home, so buying points to lower the mortgage rate may not be an option. In addition to these methods, experts suggest you can save money when you’re buying a home.
These 3 costs are negotiable when buying a home, experts say:
There are several costs buyers may negotiate during the home-buying process:
1.) Negotiate the purchase price
You may never make a more expensive purchase than buying a home. There is no doubt that the cost of the house is the most significant negotiable element when buying a home. Before haggling with the seller, it’s wise to familiarize yourself with your local market conditions as well as the seller’s situation.
When first putting the home under contract, you should be as aggressive as possible. There are a variety of factors that influence negotiations depending on the seller’s situation. Using these details, along with the number of days on the market and listing history, a good agent will determine the entry offer price. It is sometimes best to just get a home under contract as quickly as possible if it has only been on the market for three days, and then renegotiate during due diligence.
2.) Home repairs
When a home inspection contingency is included in a sales contract, you are able to walk away from the deal if expensive repairs are discovered during the inspection. However, if you still want the home, you can ask the seller to make the necessary repairs or reduce the price.
A common strategy I use is to have sellers pay for repairs to roofs, HVAC systems, plumbing systems, and electrical systems,” says Michael Underwood, Realtor with Underwood Team, Austin. The way we typically handle that is to show a reduction in the price of the home. It’s built into the loan. The buyer receives the money instead of having the seller repair or upgrade the home.
If you need to negotiate the cost of repairs for your home, work with your agent to exercise discretion. A buyer’s most successful negotiation with a seller is a safety issue,” Underwood says. In Underwood’s view, buyers often turn sellers off if they negotiate for visible or dated items after the offer has been negotiated. This practice is referred to as “nickel and diming.”
3.) Don’t forget closing costs
Closing costs, such as appraisals and loan origination fees, can add another 2% to 7% to the purchase price. Therefore, if you buy a $350,000 home, you should expect to pay another $7,000 to $24,000 in closing costs.
Fortunately, closing costs may also be negotiable, as many motivated sellers are willing to cover a portion of them. Most lenders allow sellers to contribute up to 6% of the purchase price towards closing costs. There may be a lesser prevalence of this practice in competitive markets. A seller can receive a tax credit by paying some closing costs, which is one way to push a deal through.
