Buying a house could be the biggest investment you will ever make, and you shouldn’t just rely on the Seller’s word. It is important to learn the true value of the property and then negotiate the right price and terms. Here are some tools that can help you:
Use county property information sites
These sites can provide a recorded history of a potential purchase. Using county records allows you to check the legitimacy of seller claims. For example, a property may be listed as a 3 bedroom, 2 bathroom, but the county records say it is a 2 bedroom, 1 bathroom. A red flag should go off in your head. Why don’t they match?
County property sites usually list all the Year-to-Date Recorded Sales information based on the purchase property’s address. For those in Florida, I provide a page on my website that lists all the property information sites by county at: Florida’s County Property Information and Clerk of the Court Websites.
Look at comparable prices in the neighborhood
You can do your own research and get comparable home prices on websites for free if you aren’t using a real estate agent, but if you are using a real estate agent, ask them to provide property comparables for your review. Make sure you get copies of:
- Pending Sales: These are current properties listed in the Multiple Listing Service (MLS) which have not been sold.
- Sale of Properties from the last three months: These may not always be available, but ask. No sales may be a good sign. Neighborhood stability!
Submit your offer to purchase
Once you have determined a value for the property, there are two ways to make an offer: by price or by tersm.
- Negotiating by price: There is room to negotiate the price but still produce a win-win deal for the Buyer and Seller.
- Negotiating by terms: There is little to no room to drop the price, but the Seller can provide better terms for the Buyer. Examples of better terms could be:
- The Seller holds a mortgage for the Buyer or the property is sold through seller-financing
- The Seller may allow you take over “Subject To” the existing mortgage.
- The Seller requires “No Money Down”. Also make sure you negotiate the smallest deposit possible. In Florida, the minimum amount is $10.
- The Buyer and Seller exchange an asset for another asset. I have learned that you don’t need money to make a deal. The Greater Miami Real Estate Exchangors specializes in exchanging assets.
There are a million ways to negotiate on terms. Don’t be afraid to get creative. Just don’t forget the most important thing when you submit negotiated terms in your offer to purchase:
Make sure it is all in writing
Realtors have a contract template that contains disclosure forms and allows you to enter your negotiated terms if they are not already provided on the contract template. If you are not using a real estate agent, contact a local investor and ask them what they use for a contract. See if you can get a copy of one. I have never had a problem getting any document for free, but you have to ask.