What Can You Negotiate When Buying a Home?

A More Balanced, Buyer-Friendly Market

If you’re in the market to buy or sell real estate right now, you’ve likely noticed that there are quite a few homes for sale and buyers are taking their time to find one that meets their specific needs. But, did you know that this more balanced market has also led to an increase in negotiations, whether the price or other terms? Let’s take a closer look at why.

When the Covid-19 pandemic hit and threatened to tank the US economy in 2020, the Federal Reserve lowered the federal funds rate, a figure that has a major influence on mortgage rates. As the federal funds rate fell, so did rates for homebuyers. The result was a rush to sell and buy homes. 

Prior to the pandemic, home inventory was already low. With more buyers and investors taking advantage of low mortgage rates, inventory became even more scarce. Incredibly fast sales were common as well as multiple offers, often well over the asking price and without typical necessities like an inspection and appraisal.

However,  this environment was never sustainable.

Due to inflation and a variety of other factors, The Fed began increasing the federal funds rate in March of 2022 and mortgage rates followed. As rates climbed higher each month, the blistering real estate pace here in Colorado and across much of the country slowed drastically. 

As of today, a shrinking buyer pool due to higher mortgage rates has led to a surplus of home inventory and a more balanced market. If you're still out on the hunt for your dream home, that means the door is open for you to negotiate a better price and more favorable terms. And if you're selling a home, being open to compromise on these items will help you stand out from all the excess inventory.

One caveat. With inflation finally easing, The Fed has already signaled that they hope to reduce the federal funds rate as soon as next month (September). This could lead to another spike in activity that could potentially wipe out the current backstock of inventory and again, swing the market to favor sellers. 

So, with an unpredictable window of opportunity where buyers have market leverage, let’s get to those potentially negotiable items that will get everyone to the closing table. 

7 Potential Points of Negotiation 

Before you start throwing out below-ask offers, it’s important that you work with an experienced real estate agent to better understand the market where you want to buy a home and the seller you may be negotiating with if you decide to put in an offer. 

While it’s generally taking longer to sell homes, certain micro-markets across both Denver and Boulder are just as hot as ever. Move-in ready properties in these prime neighborhoods often go under contract in their first week and sometimes for well over their list price. 

Working with a professional who knows your target market inside and out will give you insight on comparable prices, how long properties are sitting (or not), and why certain homes haven’t sold. With their help, you can come up with a plan to get you into the right home for the right deal. 

Negotiation points to consider when strategizing include:

1. PRICE – If a home has been sitting on the market, needs updates/repairs, or was listed for more than the comps support, you can certainly negotiate on price if the seller is open to it—and if your offer isn’t insultingly low. Even if you submit a full-price offer, you can later adjust your offer price if the inspection reveals the need for major fixes.

2. CLOSING COSTS – While a seller might be a stickler for their asking price, they may be willing to cover other out-of-pocket expenses. Typically ranging from 2-5% of your total loan amount, closing costs include loan-related fees, title insurance, the appraisal, an inspection, and more. Negotiating a seller concession to cover these costs can make buying easier, especially if you’re putting all of your savings into a down payment. 

3. FURNITURE, APPLIANCES & DECOR – Upsizing and don’t want to buy more furniture? Love the look of a home? Talk to your real estate agent about including items in your offer. While homes typically include appliances, your agent can clarify what stays with the home as well. Again, a full-price offer in exchange for a pool table or the top-of-the-line washer and dryer just might seal the deal.

4. REPAIRS – Whether flaws are apparent when touring the home or uncovered during an inspection, you can request that the seller attend to repairs such as a hail-damaged roof, outdated electrical, or a rotting, unsafe deck. If you’d prefer to handle the repairs yourself after closing, you can negotiate a credit to cover the estimated costs. Just keep in mind that the final price tag can end up going over that estimate.

5. CLEANING – Some sellers abide by the etiquette of providing a clean and move-in ready home for their buyer. However, that’s not always the case. And nothing reveals hidden dirt and years of grime like a full move-out. So, ask your agent to write a professional deep cleaning into your contract. You can also potentially negotiate extras like carpet and HVAC/duct cleaning, so you can move into a sparkling clean home.

6. RATE BUYDOWN – A mortgage rate buydown temporarily reduces your interest rate and monthly payments during the early years of the loan, and can even bridge the gap until you’re able to refinance at a lower rate down the road. If a property is languishing on the market, the seller may be willing to pay the required buydown lump sum for you. That could mean huge cost savings for you.

7. TIMELINE – This can go both ways. You or the seller may need flexibility in the timeline for closing. Feel free to ask for a schedule that works for you and have your agent ask the seller’s agent about theirs. Allowing them to remain in the home until they can move out can provide you with the leverage to negotiate the items listed here.

Now, if you're a seller, all of the above are also on the table when it comes to getting your home sold. If your home needs updating or has been sitting on the market for a few weeks, a price improvement is just one available option.

Use one of the above tactics or get creative—offer to pay HOA dues or paint the interior the color of a buyer's choosing before they move in. Your agent will also collect feedback once your home is on the market. See what's detracting people from making an offer and fix it—or offer a credit for a buyer to address the issue. Get creative if needed!

Ready to Find Your Dream Home or Sell Quickly?

By working with a PorchLight agent, you'll receive comprehensive services tailored to meet your specific needs. Our agents have the insight and industry expertise required to navigate an ever-evolving market. They will guide you through the process, advocate on your behalf, and empower you to make smart real estate decisions.