Bob Northern & Company
12540 Patterson Ave
Richmond, VA 23238
Tel: 804-708-9463 • Fax: 804-708-9467
Negotiating Your Contract
How much can I expect to negotiate the price of my new home?

What is the Seller's bottom line?

How Much Can I Expect to Negotiate The Price Of My New Home?

I don't want to overpay for my new home and look foolish. I don't mind paying a fair price, but how much should I pay?

This is a very real question we hear all the time. Buyers need to understand they are not buying stocks and bonds. It's true they're buying an investment, and their home will probably be their largest single investment. Often buyers get lost in the zeal to prove they are the king of negotiators! They get blinded to the fact that this property will be their home for years to come. They often overlook the fact that a home is more than a structure. Besides buying the house, they are buying new neighbors, convenience to schools, shopping, churches and pride of ownership!

When a seller is willing to drop his home significantly below the value of similar properties, he probably has a good reason to due so! Nice homes don't sell cheap! Buyers and sellers need to remember it must be a "win-win" situation for both parties. They need to get away from the mindset that it is a "duel to the death" or some prize to be won at the expense of the other party.

In today’s volatile market a Buyer’s Agent may be able to save you thousands of dollars! Many sellers are forced to discount their homes substantially to compete with other sellers who are offering their homes for sale as “a short sale” to avoid a foreclosure. There are many bank owned “REO’s” on the market which are also dramatically impacting property values. “REO” is Real Estate Owned by banks due to foreclosures.

Make sure you pick an agent who is experienced in short sales and REO’s to give you a better idea of what sellers absolute bottom lines may be.

Due to these reasons and the extremely low fixed rate loans that are available, we may not see such a strong home buyer’s market anytime soon!

  The sellers that cut their prices generally do so for one of three reasons.
One is the house is overpriced. The fair price can be easily determined by having your "Buyer's Agent" do a "market analysis" of the home. The "market analysis" will show you what price(s) homes have sold for recently in the neighborhood. In addition it can show you if other homes are currently on the market. Withdrawn and expired listings will also give you an idea of a fair price.
Don't forget when you are looking at listing information to look at the "DOM" listed on the information. "DOM" means "Days On The Market". When you see that homes only stay on the market for less than thirty days it tells you that you are in a very viable market. Why would the seller want to cut his price to sell to you when he can hold out for another week or two to get a fair price that is evidenced by other sales in his neighborhood.
The second reason sellers cut their price is there is a problem with the structure or lot? Do you know what to look for to spot a horrible soil problem around Richmond, called shrink-swell soil that can cost tens of thousands of dollars to repair? How about mold and mildew that has been painted over to look like the home has been well maintained? What about a bad roof or a deteriorated below ground oil tank. If you have a leaking subterranean oil tank, the State of Virginia can require you to remove it at a cost to you of $6,500! Oh, I forgot, the $6,500 includes removing the contaminated soil by one of a very few registered contractors who is licensed to do the decontamination job!
The third reason is the seller needs to liquidate the house quickly. This is often indicative that the property has not been maintained well in the past because the seller simply didn't invest enough into the house to maintain it properly.
It's no doubt that sometimes you can get a good deal just by being in the right place at the right time. Hey, we can all hope!