The real estate market has now revolutionized into a buyers’ paradise where consumers are spoilt for choice. Gone are the days when the end-users stood behind, and the investors led the property-buying race. From high spending on marketing campaigns to few giving discounts, the developers are searching for real buyers and trying to lure buyers.
In this real world, it is all-important for buyers to know that they are the ‘king’ and can negotiate a good deal. But real estate negotiation doesn’t mean being too demanding and unrealistic.
If you have found the dream home you want to buy, start preparing yourself for a good deal. Learn how to negotiate flat price with builder before submitting an offer. There are plenty of ways to bargain property prices and ensure you get a good deal.
How to negotiate flat price with builder?
When you buy a home, the seller will probably expect you to negotiate the asking price with multiple offers. Most sellers quote a bit higher than the market value for homes to compensate for negotiations. Negotiating the price can be frightening, but knowing what to expect can make the negotiation process less risky. Negotiating a property price requires a lot of organization, patience, and sometimes compromise.
Also Read: Top 10 Real Estate Builders in Mumbai
Here are some steps you need to follow while bargaining for property prices
- Be clear from the start
The buyer should always initiate the negotiation process because the seller is never too willing to negotiate. As a buyer, the priority should be finding a property that fits your budget. Then, finalize a property, set the final budget, and start negotiating with the builder.
- Be realistic
Be sensible while offering a low price. Let your seller know you are a serious buyer who will complete the transaction. The negotiation process starts by asking for a negotiable price. The builder may become disappointed and call off the deal if you start with too low a price.
On the other hand, if you have done a thorough research and come to know that the property is fairly priced, then offer just a little less than the asked price.
- Do not be eager
Try to stay calm even if you fall in love with the property. Do not show away your eagerness and be ready to walk away at any point. Be firm on what you are asking for; that is your purchasing price. Don’t worry; this will not ruin your prospects, and the seller will become sure that you have made up your mind about buying the home, and he won’t budge.
- Find out why the property is on sale.
It makes sense to bargain if it is a foreclosure property. However, if it is overpriced, the property is in the market for a long time. Therefore, it’s important to research the property and determine whether it belongs to any of these categories. If it is, then avoid buying such properties because it might not be a good deal for you.
- Be flexible
The home builder will often accept a slightly lower-priced real estate offer if it comes with a perfectly negotiated agreement. Try to compromise a little instead of being firm on the pricing. The buyer may have to compromise on features in terms of size, price, and location to get the perfect house at the perfect price. If you are flexible enough while negotiating the price, you will be a step ahead of closing the deal.
- Ask for closing costs.
You not only need to pay the down payment while closing the deal. You also have to cover the closing costs, the expenses you must pay to the lender in exchange for servicing your loan.
The most common closing costs include inspection costs, appraisal fees, and credit check fees. The seller may agree to pay the closing cost to close the sale faster. Ask your preferred lender if you can roll the closing costs into the loan.
- Close the deal
Try to close the deal as early as possible. If everything goes well, ask your real estate agent to submit an offer because other potential buyers are waiting to buy the same property.
Real estate negotiation tactics
Here are some different real estate negotiation tactics buyers need to know before signing a deal.
1. Show your cards second
While negotiating, always try to price second or be the person to name your initial offer. Naming your price second will get you a better deal and can cause less anxiety after negotiated agreement.
2. Connect personally
Sometimes, being friendly and connecting with the opposing party helps you get a good deal. Making those personal connections and touches through letter writing can go a long way during negotiations.
3. Use affirming language
Being friendly and using affirming language can make someone feel welcomed and heard. It also offers a positive reputation in the real estate market which can be quite advantageous while negotiating the price.
4. Body language and facial expressions will set the tone.
Depending on whom you are negotiating with, be mindful of your body language, facial expression and voice. Many facial expressions occur unintentionally, which we don’t even consider. Our body language almost always evokes emotion, and facial expression evokes a response in someone else’s mind.
5. Begin close to the market value
Don’t throw out a lowball offer when making your first home offer. In this selling market, doing this will offend the opposing party, and they’ll pass on your offer. The initial offer should be below the asking price and slightly above the market value. In this manner, you’ll have more space to negotiate and will stay below your client’s asking price.
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6. Talk on the phone or meet in person.
You should talk directly over the phone or meet in person when discussing the details. This allows you to read the emotions of the opposite party better and gives you less time to rework or think over their offerings.
7. Know when to say No
Learn when to say no and walk away while negotiating the price. It is one of the hardest real estate negotiation tactics buyers should know because saying no to a deal at any time will also help you continue the negotiation process by making a fair counteroffer. Know your builder’s maximum or lowest purchasing price before making an offer.
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Negotiation examples in real life
Imagine moving to a new town with your family and living in a rental house. Now you have finally come across that perfect house and wish to purchase. But, unfortunately, the seller is found to be unreasonable.
The house’s market price is $600,000, but according to the research, your real estate agent states it to be overpriced. By your estimate, the fair price needs to be $500,000. However, when you offer that amount, the seller doesn’t counter and tells you that you are not even close. You might think the seller may deny the fall in the housing market prices, which has affected the prices in your town.
Sellers are generally looking at the prices that are paid a few years ago for their neighbor’s houses, while on the other hand, the buyers are looking at comparable transactions of the last few months to get a fair price.
Consider a creative strategy ideal for cutting through the standoff. First, understand that a house purchase is a very tight deal. Once the seller commits to a particular buyer, he can’t legally sell the house to anyone else, even if offered a significantly higher price.
In this circumstance, a loose deal format might provide a way forward. For example, if a higher offer is being made to the seller, say $525,000 for the house, then a 60-day window period is to be offered to the seller to keep shopping for the house. Then, if any better offer comes at that time, the seller can walk away by paying a breakup fee, say $25,000 or even less.
With this deal structure, you can create value for the house based on different beliefs. For example, you can tell the seller, “You think $600,000 is the worth of the house, but my offer of $525,000 is much better than you would not get. I’m so confident in my opinion that I am ready to give you 60 days to prove me wrong.
” If you find a better price, I’ll keep searching for the perfect house. If you don’t find a better deal, you agree to close in 60 days at my price. “
When to stop negotiating on a house?
One should stop bargaining once the price, which is very close to one’s budget, is arrived at. Although, if the final price differs from the one set in mind, the home builder might offer additional benefits that can add a very good value to the deal. Every negotiation agreement has a breaking point, and one should never reach that point. The buyer and seller will sign the purchase offer containing the agreed-upon price and terms.
How much will a builder negotiate?
The amount of money offered below the seller’s asking price also depends entirely on the comparable sales and condition of the house. For example, in the buyer’s market, offering 20% below the asking price is reasonable if the house requires extensive repairs. Offers of 5-9% under price are also acceptable if the house requires remodeling or upgraded appliances.
The greatest asset is the comparable homes sold for a similar price and their features and conditions compared to the house in question. Competitors can sometimes motivate the builder to reconsider their original asking price. It’s always a good idea to have an appraisal contingency. If the builder declines to lower the price more than a home is appraised for, the appraisal contingency permits the buyer to walk away without losing the earnest money deposit.
The final takeaway
Now you know how to negotiate flat price with builder, and you may end up walking away with a great deal. The real estate agent will help you compare properties and sign the negotiated agreement because they have previously worked and are familiar with the negotiation tactics.
At PropertyOk, we not only offer perfect property, but our realtors also have a wealth of knowledge with multiple years of experience.
Frequently Asked Questions
1. How much should you negotiate with the builder when buying a flat?
The initial offer can be up to 15% less than the asked price, but the buyer should be willing to settle the deal for a discount of 7-8%.
2. What negotiating points should be kept in mind while buying a flat?
The buyer should be clear, firm on their decision, realistic and flexible, find out why the house is on sale, why the seller is willing to move, and should close the deal as early as possible while buying a flat.