How to Negotiate the Best Deal on a Home

When Sharon Morris was house shopping nearly three years ago, she knew the market had recently taken a hit in the Washington, D.C., community where she wanted to live.

“The seller was an investor who was renovating houses and selling them,” says the records management consultant. Knowing that the house had been listed for more than a month and the seller had other homes on the market, “I told my [real estate agent] I was going to lowball him a little bit because I knew he needed to get rid of the house,” she says. The seller’s initial list price was $350,000, but Morris countered with $280,000. The seller balked at first but finally agreed to sell the two-bedroom, two-bath home for $285,000, “though he only made about $20,000 off the deal,” Morris says.

Though there are glimmers of hope in the real estate market, home prices are still dropping in many cities. Standard & Poor’s noted at the end of 2010 that six markets–including Atlanta, Miami, and Seattle–had reached their lowest levels since 2006. As a result, many buyers are hesitant to make purchases because they’re “concerned about whether prices are going to fall further,” says Elizabeth Weintraub, a real estate broker and the homebuying expert for

Even so, low mortgage interest rates and falling home prices have combined to make houses more affordable than they’ve been in the last two decades. While you can’t know for sure that prices have reached their bottom, you can get a good deal, particularly in this buyer’s market. With tips from experts, you can follow Morris’ lead and save thousands on your new home no matter what the overall housing market does.

Research is key.
The more knowledge you have about the house and the buyer, the better off you’ll be in the negotiation process.

Get good representation.
A real estate agent can guide you through the negotiation process, giving you access to pricing trends in the area, town, or neighborhood you’ve identified. However, if you want someone who can help you come up with the best offer, steer away from a dual agency agreement, says Doug Miller, a real estate attorney and executive director of the Navarre, Minnesota-based nonprofit Consumer Advocates in American Real Estate. This is when the same company can represent both the seller and the buyer. “What ends up happening is the agent legally has to say, ‘I’m sorry, I’m a dual agent so I can write the offer but I can’t give you any advice as to what to offer.’” Since the agent can’t advocate for you or the seller, “you’re actually on your own,” Miller says. As an alternative to agreeing to the possibility of dual agency, buyers could hire a backup agent from another company and “require the primary agent to withdraw with no fees being owed if a dual agency situation presents itself,” Miller explains. Note that laws about dual agents vary by state. Another option is hiring an exclusive buyer agent. Such agents don’t take listings, so there’s no possibility of dual agency. These agents can be found through the National Association of Exclusive Buyer Agents.

Know what the seller paid.
While you may not be able to determine how much the seller owes on the home (but you can try to find out by asking the seller’s agent or title company), you can find out how much he or she paid for it by looking up county tax records or even checking some real estate sites on the Web. (Zillow provides this information at no cost.) In this age of upside down mortgages and falling prices, such information could be helpful since “a seller who has $100,000 in equity is going to be far more flexible in negotiations than a seller with $1,000 in equity,” Weintraub says.

Learn the seller’s motivation.
Ask the seller or the seller’s agent why the seller is moving. While they don’t have to reveal that information, many times they do and it can help you craft an offer that’s a win-win for all, says Nelson. “If the seller’s top priority is cash but the ability to move on without doing any more work to the home is a close second, consider making an as-is offer,” she suggests. Likewise, a seller who is divorcing and moving out of state might take less money to get the home sold quickly.

Consider the home’s time on the market.
The longer a home has been on the market, the more negotiating power you have. Look for homes that have been listed for 60 days or longer. “You don’t take a listing that’s been on the market for one day and ask them to sell it at a 10% discount because they’re probably not going to do it,” Weintraub says.

Find comparable sales.
If you have an agent, let him or her brief you on the area’s pricing trends and what similar homes have sold for, says Tara-Nicholle Nelson, the consumer educator for Trulia, a real estate search engine that has home listings across the country. While an agent’s Multiple Listing Service will offer the most complete information, there are free websites that feature listings including,, and

While some homeowners think they’ll get the best deals on foreclosures, they might do better by looking at other homes in distressed neighborhoods. Those sellers will likely negotiate to compete with the local foreclosures, and those homes will probably be in better condition, Weintraub says. Also, find out whether similar homes sold above, at, or below the list price. “If 98% of the homes sold within 5% of the sales price, an offer of $190,000 on a $200,000 home might very well get accepted,” says Weintraub.

Negotiation Basics

Once you have a ballpark figure in mind, it’s important to prepare for the negotiation. Whether agents discuss terms face to face, by phone, or via e-mail depends on the location, says Nelson. “In some markets, agents primarily communicate face to face. In others, e-mail and phone are preferred.” When it comes to a “for sale by owner” situation, sometimes face-to-face negotiation can be harmful, says Weintraub, since “people have all kinds of reasons to be prejudiced and discriminate against each other.” The best time to negotiate on a home is when fewer people are buying, which tends to be at the end of the year around the holidays, Weintraub says, but here are some tips for getting the best results no matter what the season.

Narrow your priorities.
If you go into a negotiation wanting 10 different things, you’ll likely turn off the seller and come away empty-handed. Instead, come up with a short list of things you’d like the seller to consider, such as lowering the price, leaving the appliances, or providing assistance with closing costs, says Nelson.

Leave your emotions at the door.

Don’t let the seller know this has been your dream house for the last six years. Give the impression that you’re considering other homes even if you’re not. Likewise, don’t tell the seller that you can’t afford the offer. “What the seller’s going to say is, ‘Then why don’t you go buy something you can afford?’” Weintraub says. “So, forget that tactic.”

Sell yourself.
The last thing a seller wants is to take their home off the market and have the deal fall through. A house that’s put back on the market could be even tougher to sell if potential buyers think something is wrong with it. So anything that can show the seller that your financing is solid gives you more power when negotiating. Show your lender’s pre-approval letter. Weintraub suggests letting the seller see your FICO score if it’s really high. If you’re buying the house with cash or can put down a large “earnest money” deposit, that may also influence the seller.

Make the moving process easy.
People are more open to negotiation with those that they like, so if you can make the moving process easier for the seller, let him or her know up front. A quick closing date could seal the deal. Or “offer to let the seller stay in the property after the close of escrow for a few days without paying any rent,” says Weintraub. Rather than looking at negotiation as an adversarial process, find ways to make things easier for both of you. “A very relaxed environment can make a difference between your offer getting accepted or rejected,” Weintraub says.