5 Tricks Negotiating Home Buyers Need to Know

When it comes to buying a home, almost everything is negotiable. Of course, both the buyers and the sellers know that, so both parties will bring all of their negotiating skills to the table. The person who knows the most about negotiating will have a huge advantage, so every potential home buyer should study a few tricks of the trade to get the best deal that they can.

Anchor Price

Humans have a cognitive bias that is called anchoring, which causes them to rely more on the first piece of information that they hear when making decisions than on later pieces of information. In the context of buying a home, that means that most people will base their expectations on the first price that they hear for the home, even if that price is not the most reasonable. This is a very powerful cognitive bias, so even people who are aware of it have trouble eliminating it. Awareness can certainly reduce its impact, but some of the effect will remain.

Fortunately, it's possible to take advantage of this bias. When negotiating, try to be the first person to present an offer. Anchoring will help to make it seem more reasonable, which lets you set the tone of the negotiation. Remember that the bias is only makes people value the first information more, and it does not eliminate later information entirely. That means the first offer can't be too unreasonable, or else it will get discarded.

Do the Math

Most sellers present prices in the most appealing way that they can. If the total price is low, they focus on it instead of a higher monthly rate. If it's high, they spread it out of a large number of months and focus on the low individual payments. Always do the math to figure out whatever values the seller isn't telling you, to make sure you don't run into any unpleasant surprises.

Get the Warranty

A home warranty will cover unexpected damage to some or all of the house after a sale. That's very valuable, since it gives you enough safety to skim over some of the inspection to speed up a sale. Since most people would rather have a fast sale or a slow one, that can greatly improve your position in the negotiations, and even give you the edge over another buyer that is willing to pay a little more but needs more time to seal the deal.

Study Up

Knowledge is power. If you don't know how much something is worth, then the seller can easily overcharge you for it. If you do what approximately what it is worth, then that knowledge will set your anchor price at a reasonable level and help you resist the seller's tactics. This research will also help you to figure out what sort of price the seller is likely to expect, which might be very different from their posted price if they are expecting to negotiate something lower.

Read Body Language

Humans control their words easily, but hiding body language is hard for the vast majority of people. Fortunately, most people are also fairly bad at detecting changes in body language, which gives the people who study it a huge advantage.

At the most basic level, mimicry can help make people trust you and think of you as a friend. It's best to do this subtly, such as by copying hand placement and sitting position. You should also look for signs of annoyance or impatience, such as frequent movement. These are signs that the seller wants to end the conversation, which can be an opportunity to quickly seal a deal. On the other hand, an irritated seller who knows that they have an alternative available is likely to reject an offer. That means that it is usually best to be as polite as possible and avoid behaviors that seem to irritate the seller for as long as possible. Only try to take advantage of their desire to end the meeting if they are getting tired or impatient without feeling angry at you.