Negotiating the purchase of a home

Buying a home is the biggest investment that many people make during their lives. Knowing how to negotiate the best deal possible not only makes this purchase less stressful, it also makes it easier for buyers to find the properties that fit their needs and fall into their budgets.

A few simple tips can make the process easier. Most of these suggestions come down to being informed: the more buyers know, the better chance they have of getting what they want.

First, a buyer should learn who is representing the seller. Many real estate brokers are sellers' brokers, which mean they try to get the sellers the best terms. Transaction brokers facilitate the sale but don't represent either the seller or the buyer.

Exclusive buyer brokers don't accept real estate listings, and instead serve only buying clients so may have an advantage in getting the lowest price for the buyers. Knowing which type of real estate agent is involved can help both buyers and sellers in the home-buying process.

The best way to find most qualified buyer brokers is to search online, contact the National Association of Exclusive Buyer Agents (www.naeba.org) or Colorado Exclusive Buyer Agents Association (www.homebuyerscolorado.org).

The next step to being prepared to negotiate for a house is to know what's on the market. By looking at a dozen or so properties, a buyer can feel more comfortable about the property he or she has in mind before making an offer.

A good way to start to learn about properties in the area is to peruse through local newspapers, markets or online resources to get a sense of real estate values.

Another good first step is to get pre-approved to finance the purchase. The pre-approval process helps establish a spending budget and also is more powerful once both buyers and sellers are at the bargaining table. Pre-approved buyers can close on a deal after a few weeks, instead of having to wait a month or two.

Once a property of interest is identified, the more information on the property that the buyer can find, the better he or she will be able to negotiate. If the property has been on the market for a long time or if the price has already been reduced, the seller might be more willing to negotiate.

It's good to know if there are any other offers, or if and why previous offers have been turned down. Knowing the condition of the property - for instance, if it's being rented or is vacant - helps the buyer choose what offer to make. Information on how long the seller has owned the property and how much they paid for it are available in county records.

The buyer can get a feel for what sort of competition should be expected by learning how long properties stay on the market in the area.

Before making an offer, buyers should consider if the seller is leaving other furniture or appliances behind. Other factors such as radon, expansive soils or knowing if there are any rental restrictions should also be researched. However, the buyer may want to first get the property under contract then obtain this information through the due diligence period.

Three final pieces of useful information are the sales-to-list price ratio in the area, the average price per square foot of recent sales in the area, and absorption rate.

The key to negotiating for a house is to be informed, and then to stay relaxed and patient through the actual negotiating process. Buyers shouldn't let sellers know that they have fallen in love with a house, and buyers also should avoid bidding wars with other house-hunters.

Finally, the most important part of the negotiating process is to know one's own limits. A buyer should never be talked into spending more then he or she can afford, and let their emotions take over what should be a fun and exciting experience.