As a first-time home buyer, you probably assume your realtor or real estate agent will do the dirty work of negotiation for you. While that may be true, or you might take a DIY approach selling by owner, make sure you’re not missing any opportunities to bargain for what you want—whether that involves closing costs covered, the entire house repainted, or an extended move-in date. After all, the worst thing a seller can say is no, and you won’t know until you ask.
“The biggest mistake I see young home buyers making is assuming their real estate agent will be proactively and creatively negotiating on their behalf,” adds Zoe Chance, a professor at Yale School of Management who researches influence and negotiation skills. “The agent’s incentive is to have the deal go through, not to get their client the best deal they can, but they will ask for anything you ask them to ask for.”
Here are five things you should always negotiate when purchasing a home, no matter what.
1. All or a percentage of closing costs to be paid.
One of the primary things you can successfully negotiate as a first-time buyer? Closing costs. “Closing costs often catch first-time buyers off guard because they don’t realize they’ll need extra cash to complete the transaction,” says Elizabeth Ann Stribling-Kivlan, real estate broker at New York City-based Stribling & Associates. “The total amount depends on where the property is being sold and the value, but home buyers can typically expect to pay between 2% and 5% of the purchase price. However, closing costs may be paid by the seller or the buyer. If you’re in a buyer’s market, and the seller is anxious to move on from the property, you might be able to have the sellers pick up some or all of the closing costs.”
This puts extra cash in your pocket that you can redirect toward renovations, big ticket repairs or updates, but you can also request a closing credit for specific changes made after purchase. “For example, the property needs the driveway sealed or the new owner would like the deck refinished,” explains Teris Pantazes, who owns a homeowner and home buyer property management system in Maryland and often partners with real estate agents. “These are items that a seller might ‘credit’ the home buyer, which means they collect the money and immediately give it back at settlement table. This doesn’t lower the ultimate purchase price, but it does lower the amount the buyer has to come out of pocket. Sometimes, you can increase your offering price slightly and simultaneously ask for a credit—splitting the difference but keeping everything financed.”
On the flip side, if you go the closing credit route, think about the timing of using a credit toward repairs highlighted in a home inspection. You may also want to complete work before closing the sale, just to make sure the seller remains responsible for the final cost and quality of the end result. “It’s very likely your home inspector will find things that need fixed,” says Sara Hopkins, a realtor in Des Moines, Iowa. “If there are things found that need taken care of, your seller should be paying for it. Even if a buyer walks away, it’s still very likely the next buyer will find the same things. So it’s in the best interest of the seller to take care of it.”
2. The premium of a home warranty, at least for the first year, and repairs related to inspections.
“Always, always ask for a home warranty,” advises Hopkins, a realtor in Des Moines, Iowa. “It’s very common for a seller to pay this expense up front. The seller pays the premium at closing, usually around $450-600, and then the new homeowner is responsible for the deductible with any claim made.”
While a homeowner’s warranty covers the repair of key items like heating and air systems, plumbing or appliances, a home inspection can help you save money in the future, too. Two types generally exist: standard inspections intended to catch both concerning and insignificant problems to be fixed, and more specific inspections that target household areas like your roof or bathrooms. A seller can decline the latter type of inspection if they deem it unnecessary, which can be inconvenient, but at the same time gives you leverage and flexibility to either walk away from a potential issue or fix it for good.
Real estate investor Eric Bowlin learned this the hard way when he purchased a house with a slow drain. Although the inspector said it was probably just clogged, Bowlin hired someone to check it out—and discovered tree roots in the drain. He was consequently able to negotiate several thousands of dollars off the price of the house, and then got the work done to fix it for under a grand.
“As home buyers, you should insist on negotiating anything that is safety related,” Bowlin continues. “This could be ground-fault circuit interrupters (GFCIs) in the bathrooms, ungrounded gas pipes, railings that are not secured well, etc. They may seem small, and they are, but small problems can become big problems if they are safety issues. You really don’t want someone being seriously hurt or killed because no one took the time to spend $75 to install a GFCI in the bathroom of an older home.”
3. Flexibility on closing or possession dates.
Once you land on a closing date, you’re probably thinking, “How soon can I move in?” This obviously depends on your situation: you might be waiting on another house to close, trying to hire movers or shifting out of an apartment or condo lease. Most buyers assume it’s their problem to figure out, but negotiating flexibility regarding closing or possession dates is actually pretty standard.
“I represent many first-time home buyers, and many of them have the idea that they have to wait a few months before they can write an offer on a home because their lease will be up in an apartment or house they are currently renting,” says realtor Andrew Read. “I will often suggest that we negotiate with the seller to pay for my client to buy out their current lease. Many times we find that the seller is motivated to sell and has no problem with adjusting the price for the couple thousand dollars it takes to get out of the lease early.”
And it works both ways—if a seller needs extra time to vacate due to another home purchase or construction, says realtor Ali Chapin, then buyers who don’t have a property contingency can grant them the additional time in exchange for a lower price.
4. Cosmetic updates, furnishings and household items.
Realtors aren’t kidding when they say you can negotiate anything as a buyer, like furniture that perfectly fits a room layout, light fixtures, regrouting sinks and showers, minor landscaping, cars, appliances and even lawn care items. Sometimes sellers say yes to such requests because they want to make a home more appealing to the buyer, they don’t want to transport certain items to a new location, or they rarely use it.
“Although furniture usually comes as a ‘gift’ from the homeowner, it can go a long way for first-time buyers who may need to furnish an entire home right after spending most of their savings on the purchase,” says Luis Dominguez, a real estate agent in South Florida. “Sellers will often leave patio items, air filters—all things that can save a buyer money while they recuperate from the purchase.”
5. House price or mortgage loan points.
Negotiating down the listed price of a house is fairly typical, of course, but there are still some hidden tips and tricks for making it work in your favor. According to realtor Chantay Bridges, you can ask for a lower price based on factors like comparable properties, appraisal results, neighborhood status, home condition and overall market—or you can ask a seller to pay loan points on your mortgage.
“A buyer can ask a seller to consider paying points on their mortgage as a tax-deductible expense,” Bridges notes. “Many buyers would love to reduce the amount they will pay in interest, which is where points come in. Each point purchased will lessen an interest rate, and despite what amount a lender tells you, this can be negotiated.”
Another potential option, due to rising interest rates, involves assuming a seller’s current mortgage rate. “While some mortgage companies may not allow it, it could help a first-time home buyer save a lot of money,” says Dan Rivers, a realtor in Charleston, South Carolina. “This means that if the current owner has a mortgage with a low interest rate, say 3.5%, and the rates go up near 6-7%, the buyer would be able to assume the current owner’s mortgage and get the lower interest rates. There are a lot of factors involved with this process, but it is a possible negotiating item and could mean savings of several hundred dollars each month for buyers.”