Knowing what to negotiate when buying a home can matter as much as the price you agree to pay. Most buyers start with one question: how much can I get off the price? It is a fair question, but it is only one part of an offer.
A home purchase has several moving parts, and some of them can affect your monthly payment or the cash you need at closing. This article walks through what buyers may be able to ask for, what seller credits are, and the questions to ask before you write an offer.
Price Is Only One Part of an Offer
The purchase price is the number everyone sees first. But an offer is really a package of terms. Along with the price, it can include who pays certain closing costs, how repairs are handled, when you close and what happens if the inspection finds a problem. Each of these can change what buying costs you in real life, even when the price stays the same.
Your Realtor can help you decide what to negotiate when buying a home in your local market, based on which terms matter most to you. Your Loan Officer can show you how those terms may affect your loan.
What to Negotiate When Buying a Home Besides Price
Depending on your loan program, the home and the seller, buyers may be able to ask for:
- Seller credits toward eligible closing costs
- Repairs, or credits for repairs, after the inspection
- A temporary mortgage-rate buydown that a seller credit may help fund
- Closing or move-in timing that works for you
- Other terms, such as appliances or items that stay with the home
Not every seller will agree, and what is allowed can depend on your loan program. Your Realtor and Loan Officer can tell you what may be possible in your situation.
What Are Seller Credits?
A seller credit, sometimes called a seller concession, is an amount the seller agrees to contribute toward certain costs of your purchase. These may include closing costs, prepaid items and, in some cases, discount points. Loan programs set limits on how much a seller may contribute, and credits generally cannot be used toward the down payment.
Credits are negotiated, not guaranteed. They are part of the deal you and the seller agree on, and they are written into the purchase contract.
Want to see how this works before you make an offer?
The free Seller Credit Playbook explains it
Seller Credit or Lower Price?
Part of deciding what to negotiate when buying a home is weighing a lower price against a credit, and sometime buyers ask for both. They work differently. A lower price changes the amount you may need to borrow. A credit can reduce the cash you need to bring to closing, or help pay for a cost such as a rate buydown.
Neither one is always better. The right choice depends on your goals, your loan program and your market. Ask your Loan Officer to compare the options using your own details before you write the offer.
Can Seller Credits Help Fund a 2-1 Buydown?
A 2-1 buydown is a temporary rate reduction. The interest rate is lower for the first year, a little less lower in the second year, and then the payment steps up to the full payment for the rest of the loan.
In some transactions, a seller credit may be used to help fund a buydown. Whether that is allowed depends on your loan program and the terms of your contract.
The most important thing to remember is that the lower payment is temporary. Before you consider a buydown, look at the full payment, not only the first two years. The payment should make sense for you when the buydown ends.
Questions to Ask Before You Write the Offer
Bring these to your Realtor and your Loan Officer to help you decide what to negotiate when buying a home:
- What can the seller contribute under my loan program?
- Is a credit worth more to me than a price reduction?
- What would my payment look like in each case?
- What happens when a temporary buydown ends?
- Which terms matter most to me in this market?
The Right Offer Is Personal
There is no single formula for what to negotiate when buying a home, or for a strong offer. The right mix of price, credits and terms depends on your budget, your loan, the home and the people on the other side of the table. The goal is not to win every point. It is to build an offer that makes sense for you, today and when your payment settles into its full amount.
Talk to your Realtor and your Loan Officer together, before you write the offer, so you can see the whole picture.
Want a breakdown of what to ask for before you write an offer? Download the free Seller Credit Playbook.
