Negotiating Your Home Purchase!

Negotiations over the purchase of a home begin when you present the seller with a written purchase offer, usually through your real estate agent. The seller can accept your offer, in writing, reject it, or write a counter-offer, usually by modifying the original offer you presented. Several series of counter-offers may go back and forth before you and the seller finally reach an agreement.

The process of contract building ends when both you and the buyer sign the contract. At this point, the home is considered to be “sold,” though the terms of the contract will not be fulfilled until settlement.

Whether you ever reach an agreement, however, will depend on how well you and your agent negotiate the terms of the contract with the seller. If you took the time to prioritize what you wanted in the home and contract terms, you can refer back to those priorities at this stage to help you focus your negotiations.

Work For The Win-Win Solution

The whole point of negotiating is to find that point at which both parties to the contract get enough of what they want. Yet, sometimes the stickiest issues in negotiations over a home sale are very small ones. Sales have been lost, or nearly lost, over minor details when both the buyer and seller insist on getting their way and neither will compromise.

It’s important to be flexible, while keeping your attention fixed on your primary goals and the final outcome. Ask yourself: Should you demand a specific item or group of items to convey with the property at the risk of having your offer rejected? How much would it really cost you to delay, or move up, your occupancy date? Will you kick yourself if your initial offer is rejected (or out-bid) because you offered too little or asked for too many contingencies?

Be aware that market conditions will play an important role in your negotiations. If you’re fortunate enough to be buying in a buyers’ market, you won’t need to be quite as flexible, or generous, as you might need to be if there aren’t enough homes to go around.

Sales Price

Although the offer price is certainly important, it is only one part of the contract. Other contract terms will increase or decrease the amount of money you actually pay for a home. For example, you may offer full listing price (or more), but ask that the seller pay some or all settlement costs, which could amount to several thousand dollars. Keep your calculator handy when negotiating. You’ll want to assign value to everything you receive and offer in the contract.

In a strong market, you could face a multiple-offer situation. In this case, you may want to include an escalation clause in your contract, indicating that you’ll top the highest bidder by a certain amount, say $5,000. Be sure to see a copy of the highest offer before letting the clause go into effect. Also, make certain you have enough cash to cover the difference if your lender doesn’t appraise the home at the contract price.

In a weak market, you may offer somewhat less than the asking price, and hope to get a bargain. Consider, though, that other contract terms might be nearly as important to the seller as the offer price.


Your offer will be accompanied by a deposit check or earnest money, representing the seriousness of your intentions. The seller will think about the size of that deposit before accepting a contract that pulls his or her home off the market. The larger the deposit, the more confident the sellers will be of your ability and willingness to follow through with the contract.

Settlement Costs

Different traditions exist in different areas of the country as to who typically pays certain types of settlement costs — loan points, attorneys’ fees, title searches, recording fees, etc. Nevertheless, you and the seller can split these costs any way you want as you negotiate your contract.

You and the seller may agree to pay particular costs. Or, one of you may agree to pay a specified amount, say $2,000, toward the total cost of settlement. Be sure to factor the costs you decide to pay, if any, into your bottom line.


When buying a home, make sure you know what belongs to the house (what “conveys” to the buyer) and what the sellers can take with them. Generally, if something is connected to the wall, floor or ceiling, inside or outside, that would cause visible damage if removed it is considered a “fixture” and stays, such as antique hardware, chandelier, awnings, draperies, blinds, shades and rods, TV antenna, unless specifically stated “does not convey” in the contract.

Items that are not connected to the home, such as free-standing appliances, outbuildings, play sets, firewood, pool chemicals, garden tools or window air conditioners, do not convey with the home. These items should be specifically listed in your purchase offer if you want to include them in your contract.


You’ll discover all sorts of contingencies in real estate contracts. In most cases, you’ll want to include a financing contingency, making the sale dependent on the your ability to secure a particular type of financing, at or below a specified rate, by a certain date. (Ideally, you’re already pre-approved for a mortgage.)

Another common contract inclusion buyers seek is an inspection contingency. With a “general inspection contingency,” you would have the option to walk away from the contract if you don’t like anything found in the professional inspector’s report. If you include a “specific inspection contingency,” however, you’ll only be able to get out of the contract if certain problems exist or, if other problems are found, the seller isn’t willing to resolve them (e.g., timely repairs at the seller’s expense, reduction in sales price, etc.). Sellers would be more inclined to accept a specific inspection contingency.

You can ask for a home-sale contingency, making your purchase of the home dependent on the sale of your old home within a specified period of time. If you’re in a strong sellers’ market, this isn’t likely to be accepted since it could delay settlement or increase the possibility that settlement won’t occur.

A number of other types of contingencies and terms are possible. Rely on your professional agent’s advice to help protect your interests as you move through the complexities of contract negotiation.

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