What You Can Negotiate When Buying a Home
Here are five things buyers might not know to negotiate when buying a home.
Good news, house hunters: Home buyers are getting more negotiating power.
Buyers received concessions from home sellers in 45.5% of home sales by Redfin agents between December 1, 2022 and February 28, 2023. That’s up from 31.1% in February 2022, according to a March 2023 Redfin report. And we’re not just talking about price cuts. As mortgage rates rise and home buyer demand cools, more sellers are picking up closing costs for buyers and footing the bill for home repairs to close deals.
Still, most buyers don’t know what bargaining chips are on the table. “Many times, home buyers aren’t aware that they can negotiate for things other than a home’s sale price,” says Jason Gelios, a real estate agent at Community Choice Realty in southeast Michigan.
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Here are five things home buyers can negotiate in addition to a house’s price.
Mortgage rate and lender fees
Around seven out of 10 prospective buyers said in a 2023 survey conducted by John Burns Research and Consulting that they’re waiting for mortgage rates to drop below 5.5% before they purchase a home. (The 30-year fixed-rate average hit 6.39% the week ending May 18, 2023, up from 5.25% a year prior.)
Mortgage rates aren’t set in stone. “Buyers tend to let the lender set the rate, but the interest rate is often negotiable because lenders want their business,” says Gelios. That’s especially true in today’s market, where lenders are competing for a limited number of buyers.
It’s also a good idea to shop around. Nearly half of borrowers that compared rate offers said the first quote they received was not the lowest mortgage rate, an April 2022 LendingTree survey found. That mirrors a 2018 study by Freddie Mac, which determined buyers who obtained two rate quotes saved an average of $1,500 over the life of their mortgage. Even more, buyers who got five quotes saved an average of around $3,000.
Some lender fees are also negotiable, says Brendon DeSimone, a real estate broker at Houlihan Lawrence in Bedford, New York. “Sometimes there are ‘processing fees’ that are basically junk fees,” he says. Loan origination and application fees are up for negotiation, too, per Gelios. (The average origination fee is between 0.5% and 1% of the loan amount, according to Rocket Mortgage.)
When making an offer on a house, see if the seller is willing to pay for a “buydown,” a one-time fee at closing that would lower your mortgage rate, either for the full duration of your loan or for a few years.
Don’t want to buy a house that turns into a money pit? Include a home inspection contingency in your offer.
This contingency gives you the right to have the property inspected by a professional. Based on the results, you can either back out of the deal or ask the seller to make certain repairs.
Gelios advises to keep your eye on the end goal. “Focus on major issues when asking for repairs,” he says. “A leak in the roof or a busted water heater are important to fix.” Don’t harp on cosmetic flaws. “A missing light bulb or a broken latch on a window are things that you can do yourself without the seller’s help,” per Gelios.
If the seller pushes back, see if they’d be willing to offer you a credit at closing to offset some of the repair costs.
Seller-paid closing costs
Closing costs are fees paid at settlement to third parties that facilitated the sale. Usually, the buyer pays the lion’s share — typically around 2% to 5% of a home's sale price. But a growing number of sellers are offering to cover a portion of the buyer’s closing costs.
These seller-paid closing costs can make a home purchase significantly more affordable. Make sure to negotiate them upfront so that they can be woven into the purchase agreement.
A real estate fixture is any object that’s permanently attached to a property. “The general rule is if you turned a house upside down, whatever sticks to the house is supposed to stay with the property,” Gelios explains. For example, built-in bookshelves, ceiling fans, and window treatments are typically seen as fixtures included with a home.
Some fixtures, however, are up for negotiation. These could include things like refrigerators, washer and dryer sets, chandeliers, outdoor furniture and playground sets.
“Your purchase agreement should state all of the specific fixtures that you want to stay,” Gelios recommends. To protect his buyers, Gelios typically writes in offers, “All appliances and fixtures, as shown, convey with the property.”
If you’re buying an older home, a home warranty can provide some financial protection and peace of mind.
A home warranty covers the cost of repairing or replacing certain home appliances when they break, such as refrigerators, dishwashers, ovens, water heaters, and heating and cooling systems — though coverage can vary, depending on the policy.
A home warranty typically costs $360 to $900 a year, according to a 2023 MarketWatch study of 39 providers. For many sellers, that’s a drop in the bucket, so see if the seller will pay for a one-year warranty. “Sellers can provide it as a credit at closing if the buyer wants to choose the home warranty company,” says Gelios. “It’s a good, low-cost way for sellers to seal the deal.”
Daniel Bortz is a freelance writer based in Arlington, Va. His work has been published by The New York Times, The Washington Post, Consumer Reports, Newsweek, and Money magazine, among others.
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