Picture this. You’ve found the perfect home. The price is right, so you buy it and live happily ever after.

You’re probably already frowning because you know it hardly ever goes like that in real life. Real estate negotiations can be notoriously difficult, and especially confusing when you’re a first-time home buyer.

We’ve created this article to inform you on some of the many different scenarios that can arise during the stages of home negotiations.

Negotiations and the contract

First things first, never assume that your realtor or real estate agent will do all the negotiating for you. While they can be helpful, often the dirty work is left to you. Before you ever even see a contract, try and take stock of what you want, and then bargain for it with the seller.

Five things that you should always negotiate for when purchasing a home are:

• Some or all the closing costs to be paid for by the seller
• The home warranty premium (at least for the first year) and repairs related to any inspections that might happen
• Flexibility on closing or possession dates
• Cosmetic updates
• House price or mortgage loan points

Don’t be afraid to ask for whatever you want. The worst that can happen is that the seller says no. While it isn’t necessary to get everything you negotiated for, often sellers will want to meet your wants and needs because they’re looking to sell their property. Just try to be reasonable and see their point of view as well when negotiating, and if nothing else, settle on a middle ground.

Timeline to obtain financing

The entire mortgage process is made up of several parts. You’ll need to get pre-approved, get the home appraised, and only then can you get the loan. This usually takes around 30 days but depending on the lender and how high their volume of business is, can take 60 days. If there are any financial issues in your record, the process can be slower and more complicated.

You shouldn’t wait until you’ve found the home that you want to start your mortgage process. As soon as you think you might want to buy property, that’s when you should get pre-approved for a mortgage.

Not only will this speed up the buying process for you, but a lot of sellers even require that buyers get pre-approved for a mortgage before they accept offers. 

Once you’ve found a home and made an offer, even though you’ve been pre-approved for a mortgage there are still things to do. You’ll have to apply for the actual mortgage loan, then make it through the process of appraisal. The lender you get the loan from doesn’t necessarily have to be the same one that pre-approved you.

There is also the underwriting process, where your financial information is reviewed to make sure that you’ve not made any claims that are false or misleading.

Only then do you finally make it to closing.

Time to inspect home

If a home inspection isn’t required by contract, you as the buyer will likely have to initiate this inspection through your realtor or real estate agent. The inspection will be an observation of the house’s structural and aesthetic issues, like the state of appliances, or the health and safety of the house.

This is an important part of negotiations, because if you find any wood rot, structural imbalances, mold, or broken appliances, then you can renegotiate the sale price (unless the offer contract states that the house is to be sold “as-is”).

Your bank might even require a home inspection as part of the appraisal process to secure a loan on the house in question.

Rights and responsibilities

For the most part, your dealings with sellers will go smoothly, but to ensure that you’re not taken advantage of, here are your general buyers’ rights:

• The right to be free from housing discrimination during the home buying process, which is governed mainly by the Fair Housing Act
• The right to be informed of any encumbrances on the title, which may include a lien, easement, and other issues
• The right to a disclosure of any defects or safety dangers, such as:
  • Waste management
  • Water supply
  • Insulation
  • Hazardous materials, such as lead paint; and
• The right to choose or refuse a mortgage provider or lender
• The right to know about property taxes affecting the property, including from previous years
• Rights related to homeowner’s insurance, title insurance, and other forms of insurance
• Rights to have the property appraised in a fair and neutral manner
• The right to obtain a market price analysis and comparison with other similar properties
• The right to obtain a copy of the Purchase and Sales Agreement prior to closing
• The right to a walk-through of the property before closing
• The right to review the Settlement Statement at closing

Conclusion

As with anything, the key is in the balance between extremes. Too many negotiations can put the deal at risk by pushing it beyond the Close of Escrow date, or by resulting in the Seller’s cancellation. Too few and you may have buyer’s remorse. Consult with your Agent as well as friends who have been through the process to find the right balance.