Buying A Home: Leave Your Emotions At the Door When Negotiating
Even though buying a home can be emotional, negotiating the price shouldn't be. The key to saving money when purchasing a home is sticking to a plan during the turbulence of high-stakes negotiations. A real estate agent who represents you can guide you and offer you advice, but you are the one who must make the final decision during each round of offers and counter offers. The process needs to be done in certain specific steps.
Get pre-qualified for a mortgage
Getting pre-qualified for a mortgage proves to sellers that you're serious about buying and capable of affording their home. That will push you to the head of the pack when sellers choose among offers; they'll go with buyers who are a sure financial bet, not those whose financing could flop. It also makes you sure of the maximum price you can afford.
Choose an agent
Unless you are a skilled negotiator and knowledgeable of the market, it is usually best to pick an agent. In Cayman, real estate agents are almost always paid by the sellers. Therefore, since this service to you is essentially free, it would seem ill-advised not to take advantage of this service. Most real estate agents in Cayman are trained and knowledgeable of the market. Choose a real estate agent from a reputable company and check references if you don't know the real estate agent. Once you have chosen a real estate agent, you should stick with that real estate agent and he or she will provide you the best service if he or she knows you are going to be loyal to them.
Ask your agent for information to help you understand the sellers' financial position and motivation. Are they facing foreclosure? Have they already purchased a home or relocated, which may make them eager to accept a lower price to avoid paying two mortgages? Has the home been on the market for a long time, or was it just listed? Have there been other offers? If so, why did they fall through? The more signs that sellers are eager to sell, the lower your offer can reasonably go. You should know that in Cayman, most real estate agents, and particularly all real estate agents who are members of CIREBA, represent only the seller and their fiduciary responsibility is to the seller exclusively. Their only obligation to purchasers is to not misrepresent or behave in a dishonest manner. That being said, most real estate agents will protect your interests and in many cases, when they deem it necessary, will advise you to retain an attorney to represent you.
Work back from a final price to determine your initial offer
Know in advance the most you're willing to pay, and with your agent work back from that number to determine your initial offer, which can set the tone for the entire negotiation. A too-low bid may offend sellers emotionally invested in the sales price; a too-high bid may lead you to spend more than necessary to close the sale.
Work with your agent to evaluate the sellers' motivation and comparable home sales to arrive at an initial offer that engages the sellers yet keeps money in your wallet.
Sellers favor offers that leave little to chance. Keep your bid free of complicated contingencies, such as making the purchase conditional on the sale of your current home. Do keep contingencies for mortgage approval and home inspection such as hurricane straps and termite protection.
Buying a home is a business transaction, and treating it that way helps you save money. Consider any movement by the sellers, however slight, a sign of interest, and keep negotiating.
Each time you make a concession, ask for one in return. If the sellers ask you to boost your price, ask them to contribute to closing costs or stamp duty. If sellers won't budge, make it clear you're willing to walk away; they may get nervous and accept your offer.
Don't let competition change your plan
Great homes and those competitively priced can draw multiple offers in any market. Don't let competition propel you to go beyond your predetermined price or agree to concessions - such as waiving an inspection - that aren't in your best interest