When COVID-19 first hit the US, home sales dropped and most experts thought it would bring about a buyers market. Fast forward to end of 2020 and prices are rising, homes for sale are flying off the market, and inventory is low and continuing to drop. The real estate market is a sellers market, with no indication that will change going into 2021.
Anyone in the market to buy a new home has witnessed this firsthand. Home sellers may have 10 competing bids by close of the first day it’s on the market. This means that price is harder to negotiate for buyers, as the seller can just go to the next in line if your offer isn’t high enough. Additionally, sellers are in the position where they can ask for more commitment upfront. “We’re seeing more full cash buys now. If the transaction isn’t in cash, more sellers are now asking buyers to waive the mortgage contingency in the contract,” says Bryan Parkhurst, a NY-based real estate investor.
Although buyers may not have much wiggle room in terms of the upfront financials, there are ways they can make up for some of this during the negotiation process. Ryan Dibble, COO of Flyhomes, advises homebuyers to think beyond list price when it comes to the purchase of a new home.
- Existing Decor. If you love the look of a home—the furniture, appliances, light fixtures, etc.—you can negotiate with the seller to buy those items with the home. This may also benefit the seller as sometimes their old furniture isn’t a fit for their new place, so they may be open to leaving it for you. Dibble advises to keep in mind, however, that this can sometimes complicate your loan and it may be staged furniture (not the sellers’ to sell).
- Home Cleaning. Anyone who has bought a new home knows that getting it ready to live in is a lot of work, and the cost can add up. Most contracts include basic conditions that must be met around home cleaning. But sellers can ask for additional services such as a deep clean of a high traffic carpeted area. Dibble says the negotiated value of these extras in a contract can be anywhere from $500 up to $1500.
- Repairs. If your inspection report uncovers items that need repairs you can negotiate to have those repairs made by the sellers before you buy the home. Remember to be reasonable here: “The etiquette when buying a home is to stick with non-cosmetic improvements. If a buyer asks for cosmetic changes like wallpaper or painting, it can be seen as abusing your leverage.” according to Dibble.
- Closing Timeline. Sellers are often looking for the fastest closing timeline possible, but remember you can negotiate the timeline to better match your schedule. Or, maybe the timing doesn’t matter to you, but the seller wants to stay in their home for an extra month. If you give them extra time for the closing, they may give you something in return.
No matter the market conditions, Dibble believes the key in the negotiation process is to not focus solely on ‘winning’. Try to be fair, reasonable and keep everyone happy. “Home buying is a human transaction and trust needs to be established between the buyer and seller, because this is such a significant and important transaction,” Dibble says. “If everyone is happy throughout the process, then the process will be much easier for all involved.”
Plus a happy seller may be more likely to add in helpful extra touches like an organized file of appliance warranties or a list of great repair people in the area. And they will be more inclined to take your call after closing when you forget the garage door code or lose your keys.