Negotiating with Confidence: First-Time Homebuyers’ Guide to Closing the Deal

Buying your first home is a challenging feat, and it becomes all the more stressful when you have to stand your ground against demanding sellers.

Some sellers might be harder to budge from their selling price, while others may prove difficult with their additional terms. But if you approach them with a proper plan in mind, you can increase your chances of purchasing your home on more beneficial terms.

To help you breeze through this daunting process, here are a few tips for closing the deal as a first-time homebuyer.

Get a Mortgage Preapproval

In order to show sellers that you are serious about your offer, you should get your mortgage preapproved from a reliable lender. This shows sellers that you have the purchasing power to close the deal and makes them take your offer more seriously. Since you can often qualify for government-backed loans as a first-time homebuyer, you can learn how to choose the right mortgage that lowers your costs before getting your preapproval letter.

Strengthen Your Finances

Homebuying offers are tied to earnest money that is deposited in a third-party escrow account. This earnest money is usually 1–5% of the property’s value. Similar to how investors use a DSCR calculator to show that they can pay off their loans, individual homebuyers like you can make a higher earnest money deposit to show the seller their level of commitment. If the offer falls through, this amount is returned to you according to your contract terms.

Speak to a Reliable Real Estate Agent

To be more prepared in your negotiation techniques, you should reach out to a reliable real estate agent. Besides inquiring about the average home sale price in the area, you can also ask them for a comparative market analysis. This shows you the asking price vs. final value of similar properties and the time they stayed on the market. Similar to using a shopping savings app, this can help you make budget-friendly decisions.

Consider Market Conditions

Besides learning about the future value of the real estate market, you should also determine if you’re in a buyer’s market or a seller’s market. A buyer’s market occurs when home sales are slow and a lot of inventory is available with tumbling prices. In contrast, a seller’s market refers to conditions where listings are flying off the shelves with increasing value. This helps you assess how strong a stance you need to take in your negotiations.

Be Open to Closing Date Adjustments

When you make an offer to a seller, you need to show how flexible you are about the closing date, the deadline to complete your home purchase. By showing you can move the closing date up or down, you give sellers another reason to consider your offer. In cases where the home is too good to pass on, you can temporarily rent a listing through a vacation rental app while you wait for your deal to close.

Show Flexibility for Closing Costs

Mortgage closing costs, traditionally paid by buyers, are typically 3–5% of the total mortgage value, but some buyers ask sellers to contribute as well. Similar to showing room for adjustment in the closing date, you can also take a more relaxed approach to closing costs. For the seller, this adds another advantage to your offer. You can also discuss this approach with professionals after learning how to find top real estate agents.

Be Ready for Counteroffers

Counteroffers to the buying price, closing date, and other terms are the biggest reasons why real estate negotiation is considered a hassle. But when you are ready for these roadblocks, you can come up with the next steps without fretting too much. For this purpose, you can write down responses to counteroffers in a personal journal or discuss them with your real estate agent. Once you have considered the possible effects of your response, you can negotiate from a more confident place.

By keeping these suggestions in mind, you can close on your home purchase on more favorable terms. As a result, you can become a homeowner without giving in to higher costs and rigid conditions.