Negotiating the Deal

While every real estate transaction is different, buyers and sellers often fall back on standard negotiating techniques to get to a signed contract both can live with. Understand the dynamics of negotiation so you can stay focused and emotionally detached during a sometimes anxious process.


Ready to Purchase

How to Search

Lending Info

How to Make Offer

Closing Info

Roles of Players


Negotiation Tips

Appreciation Info


The Fine Print

Good Faith Estimate

HUD1 Statement



  Get It in Writing
Do all of your negotiating in writing. It may seem cumbersome, but there are no guarantees with oral agreements or commitments. Avoid discussing terms with the seller or the seller's agent while your offer is on the table.

There are literally hundreds of points that you can negotiate in a real estate transaction. Usually, you'll deal with just a handful when making your offer, such as the standard financing and home inspection contingencies. Most purchase contracts, especially if they are standard documents, contain boilerplate language that may not fit your situation and may in fact be unfavorable to you. These are areas you need to negotiate carefully. The more you know about the language and art of negotiation, the better the deal you can make for yourself, and the more money you'll save in the process.


Bargaining Strategies

Technique When most effective Possible outcomes
Start low and
move up
Works best for properties that are overpriced in slow markets Seller rejects outright or counters to get you to increase your offer, and you move up and agree on a price that comes close to what you want to pay
Offer close to asking price Works best for properties that are priced well in active markets Seller may accept outright or counter to get you to increase offer slightly.
Offer the top price you can afford Works best in hot markets Seller may reject and you may have to walk away
Save terms to bargain Works best in situations where seller is highly motivated Seller may trade price concessions for your agreement to close sooner or take charge of repairs after the inspection
Give up something to get something Works in most situations Seller ends up taking something you don't really want but you ask for initially to gain a lower price or other concession
Move in small increments Works best for overpriced properties in slow markets Seller may agree to lower price if given time to adjust to the idea
Focus on issues you can resolve to keep momentum going Works best after several rounds of negotiation Seller and buyer come to terms after resolving easiest issues first
Be unpredictable Works best after several rounds of negotiation Seller accepts your offer after you suddenly make sizeable change
Make an
either/or offer
Works best after several rounds of negotiation Seller accepts one of two scenarios you offer
Split the difference Works best after several rounds of negotiation Seller and buyer settle on price exactly between asking price and offer
Set deadlines
for action
Works best in any situation Seller and buyer will act more quickly and decisively if given a time limit

TIP: In a competitive bidding situation, a seller may try to influence your offer through your agent. If your offer is on the table and you hear from your agent that the seller will accept it if you change a couple of terms, ask for a formal counteroffer before responding. In some states, such as California, a seller can counteroffer with more than one buyer at a time. All states allow a seller to withdraw a counteroffer before it has been accepted by a buyer.


Working Out the Contract
The paper trail begins with your purchase offer. You, your agent or your lawyer will probably use a standard purchase contract, which will not contain all of the terms and conditions you want. Make sure that any additions or amendments that you make to the purchase offer are clearly typed or written into the contract with your initials beside them. The seller should also respond in writing, either with a new purchase contract to counter your proposal or a counteroffer penciled in on the back of your offer. Some sellers will return the offer merely with revisions marked up and initialed on the document. These are all valid forms of communication during negotiations. If negotiations go back and forth again, and the original document is heavily marked up, take the time to prepare a fresh one that incorporates penciled-in revisions to avoid any misunderstanding. The retyped contract is ratified, or official, when you and the seller sign on the dotted line.