Latest news with #homebuying
Yahoo
18 hours ago
- Business
- Yahoo
How much is a down payment on a house?
You don't need to put 20 percent down to get a mortgage, and some mortgages don't even require a down payment. You can get a conventional mortgage with 3 percent down, but with anything less than 20 percent, you'll have to pay mortgage insurance. Making a larger down payment can get you a lower interest rate. Most — but not all — mortgage loans require a down payment, a percentage of the home value you pay upfront. How much you should put toward a down payment depends on the type of loan you're applying for and your financial situation. You might have heard you're required to put down 20 percent on a home, but in truth, you don't have to pay that much upfront. Your down payment size will depend on the minimum amount required for the loan type you're getting as well as how much you have saved for the purchase that you can comfortably part with. For example, if you plan to put down 10 percent on a $400,000 conventional loan, your down payment would equal $40,000. A 3 percent down payment — the minimum requirement for a conventional loan — would come to $12,000. The median down payment for all buyers as of 2025 was 15 percent, according to the National Association of Realtors. Bankrate insight Among Bankrate users, 42 percent, or nearly 260,000 users, plan to make a down payment of less than 20 percent, according to Bankrate's 2024 Annual Data report. Learn more: What's the average down payment on a house? Loan type Minimum down payment Conventional conforming loan 3 percent Jumbo loan 10 percent FHA loan 3.5 percent VA loan None USDA loan None Second home or investment property 10-25 percent The down payment requirements for a conventional loan on a primary residence vary depending on the lender, the borrower and the property type. For example, first-time homebuyers and buyers with low to moderate incomes could qualify for a fixed-rate conventional loan with a 3 percent down payment. However, you may or may not qualify to make your lender's lowest offered down payment. The amount you must put down will depend on your: Credit score Debt-to-income ratio (DTI) Savings and other assets House of choice Whatever the minimum required down payment on your conventional loan, keep in mind that if you put down less than 20 percent, you'll have to pay for private mortgage insurance (PMI). However, once you reach 20 percent equity in your home, you can request that your lender remove PMI from your bill. Jumbo loans are a specific type of conventional mortgage for high-priced properties. In 2025, homes that cost more than $806,500 in most markets will need a jumbo loan, though in high-cost areas, the limit may be as high as $1,209,750. Because of their size, jumbo loans typically require 10 percent down or more. FHA loans require a minimum down payment of 3.5 percent with a credit score of at least 580. If you have a credit score between 500 and 579, you'll need a 10 percent down payment. No matter how large your down payment on an FHA loan, you'll be required to pay mortgage insurance premiums (MIPs). There are two types of MIP: an upfront MIP paid at closing that's 1.75 percent of the loan amount, and an annual MIP that's added to your monthly mortgage payment. The annual MIP is based on the size of your down payment, your loan amount and your loan term, but it ranges from 0.15 to 0.75 percent of your total loan amount. If you put down 10 percent or more, and you took out your FHA mortgage after June 3, 2013, this annual MIP can be removed after 11 years. Otherwise, you'll pay this expense for the life of the loan. The VA and USDA both back zero-down payment loans for qualified homebuyers. VA loans are available to qualifying members of the armed forces, veterans and their surviving spouses. USDA loans, on the other hand, are available to borrowers purchasing homes in designated rural areas. The USDA has maps on its website that show eligible areas. Neither loan program requires mortgage insurance. With VA loans, you'll pay a one-time funding fee, which ranges from 1.25 percent to 3.3 percent depending on how many VA loans you've had, your loan type and your down payment amount. USDA loans have an upfront guarantee fee of 3.5 percent of the loan amount and an annual fee of 0.5 percent of the average annual loan balance. Your lender will be charged this fee and may pass the cost on to you. If you're buying a second home or an investment property with a conventional loan, the down payment requirement is usually higher than for a primary residence. Second homes typically start at 10 percent, and investment properties can require as much as 15 to 25 percent, depending on your creditworthiness and financial situation. Beyond the requirements, how much you should put down on a house is a personal decision. Consider: Your financial goals: Is your goal to build home equity, or would you prefer to invest that money elsewhere, such as a retirement fund? How long you plan to stay in the house: Is this a starter home, or do you plan on being there long term? If you plan on selling in five to 10 years, you might not be as interested in putting a lot of money down. Your emergency savings: Don't deplete your emergency fund just to make a larger down payment on a house. You'll need the cushion for unexpected expenses. Home needs: If you need to invest in a larger home – for example, if you need home office space or a guest room — you may be stretching your budget and need to put less money down relative to your loan size. If you're downsizing, on the other hand, a big down payment may be easier to manage. Closing costs: Closing costs are a bundle of fees paid when you finalize your mortgage. They can include attorney fees and a loan origination fee, and they usually cost 2 to 5 percent of your mortgage's principal amount. If your closing costs are on the higher end of that range, they may eat into your down payment savings. Costs to upgrade and repair the home: When you move, you'll likely need to pay for repairs or home improvements and buy new furniture or appliances. Your ability to save for a down payment is a good sign you're ready for the financial commitment of homeownership. Here are some clear benefits to waiting until you can make a bigger down payment: Lower mortgage rate: The less money you borrow as a percentage of the home's value, the less risk your loan poses to the mortgage lender. As a result, larger down payments tend to correlate with lower interest rates. More equity: The greater the percentage of your home you own outright, the more equity you have. That can be handy if you're looking to finance a renovation project in the short term. You can tap your home equity through a cash-out refinance, home equity loan or home equity line of credit (HELOC). Lower monthly payments: Because you're borrowing less money and you likely have a lower interest rate, you can expect a lower monthly mortgage payment. Cheaper closing costs: The fees you pay to your lender at closing are usually calculated as a percentage of your loan's total value, so if you borrow less, your closing costs will be lower, too. More competitive offer: If you're in a seller's market and competing with several other buyers, a larger down payment can make your offer more competitive. Being able to put up more cash might give the seller confidence that your loan will close. Lower chance of becoming underwater on your mortgage: If you finance too much of your home, and it ends up losing value, you could end up owing more money than your home is worth. Even if you can afford it, making a big down payment on a house isn't always the best decision. Here are some reasons why you may want to put less money down: It gets you in the door: If a down payment is your main obstacle to homeownership, making a lower one could be smart. More money for repairs or renovations: If you're buying a home that needs some investment, and you could theoretically pay for the repairs in cash, you may choose to make a lower down payment. Buying a more expensive home: If you take advantage of a lower down payment mortgage, you could buy a bigger home with the same money you would use to put 20 percent down on a cheaper home. Not draining your savings: By putting less down, you're potentially keeping money in the bank which you can use elsewhere. If you put that money into your house, you might get it back — and then some — when you sell or refinance. Investing it elsewhere: While homes are seen as secure investments, investors may prefer to put their money into the stock market where they could see a higher return. The lower your credit score, the more you may be required to pay upfront toward your home. For example, FHA loan borrowers may have credit scores as low as 500. However, if your score is 579 or below, you'll need to make a 10 percent down payment. If you have a score of 580 or higher, you can qualify to put down only 3.5 percent. With other types of mortgages, a lower credit score may not increase your required down payment, but it is likely to increase your overall costs. If you qualify for a mortgage, you'll typically receive a higher mortgage rate than a borrower with a lower credit score — and that raises the total cost of your mortgage. Because down payments are expressed as a percentage of the home's sales price, you can multiply the sales price by your target percentage to determine how much you'll need to put down. Here are some examples of how much the down payment on a house would be at different price points: Median home price* 3% down 9% down 18% down 20% down Midwest: $313,300 $9,399 $28,197 $56,394 $62,660 South: $365,300 $10,959 $32,877 $65,754 $73,060 Northeast: $487,400 $14,622 $43,866 $87,732 $97,480 West: $628,500 $18,855 $56,565 $113,130 $125,700 You can use Bankrate's mortgage down payment calculator to get a sense of how different down payment amounts impact your monthly mortgage payment, and the interest you can save by putting more money down. How can I find down payment assistance? Down payment assistance programs help eligible first-time homebuyers — and sometimes repeat buyers — with low to moderate incomes. Assistance can come from a government agency, a nonprofit or even your mortgage lender. It might include a forgivable or deferred loan, a grant or a matched savings program. Why do mortgage lenders require a down payment? Your down payment offsets the lender's risk. The more money you put down, the less the lender stands to lose if you default on payments, especially early in the loan term. Down payments on government-backed loans tend to be lower because the loan is at least partially guaranteed by a federal agency. When do I make my down payment? Down payments are typically made in two steps. First, you'll deposit a portion of your down payment — typically about 1 percent of the home price — as earnest money shortly after the seller accepts your offer on the home. You'll make the rest of your down payment at closing, along with paying your closing costs. This total amount is referred to as your cash to close. Can you buy a house without a down payment? Yes, mortgages backed by the VA and USDA are available without a down payment. Some commercial lenders or local credit unions may also offer no-down-payment mortgages. What other costs should I anticipate when buying a house? In addition to the down payment, you'll also need to pay closing costs, which usually total between 2 and 5 percent of your loan amount. Your lender might also require you to prove that you have reserves. This means you have enough money in the bank to cover a couple of months' worth of mortgage payments.
Yahoo
a day ago
- Business
- Yahoo
Why the housing market is so stuck, in 4 charts
The US is in the middle of the typical peak homebuying season, but all signs suggest that the market remains sluggish. Housing contract activity slipped sharply in April, even though buyers had more inventory to choose from. Meanwhile, buyers and sellers are locked in something of a standoff: More sellers are listing their properties, but prices haven't fallen much, and buyers are being picky. Mortgage rates aren't helping. They've held remarkably stable this year, hovering between 6.8% and 7%. Rate stability can be a good thing because buyers know what to expect when financing. But stability at relatively high levels prices many potential buyers out of the market altogether. Many would-be buyers find they're able to rent a much larger home than they could afford to buy. 'There was a little bit of a failure to launch feeling" this spring, said Hannah Jones, senior economic research analyst at 'High home prices persisted. High mortgage rates persisted. Economic uncertainty picked up. All of that we see reflected in the housing data.' What it will take to bring life back to the market isn't clear. Lower rates would certainly help, but there's little reason to think they'll return to 3% or 4% anytime soon, barring a deep recession. Recessions come with their own housing market tradeoffs, like higher unemployment that reduces demand and elevated mortgage delinquencies. Yahoo Finance compiled charts that illustrate how quickly the housing market shifted in the last five years, and why it's at a standstill now. Home price growth has outpaced wage inflation For decades, home price appreciation has been outstripping earnings growth. In the last 25 years, home values have more than tripled. The steepest climb came between 2020 and 2022, when pandemic moves and ultra-low mortgage rates spurred a buying frenzy across the country. Meanwhile, median incomes from 2000 to 2023 did not quite double. People with 3% mortgages are hanging onto them In recent years, the housing market has been stalled by what's known as the rate 'lock-in effect.' Anyone lucky enough to have a sub-4% mortgage rate at a time when prevailing mortgage rates are closer to 7% is reluctant to give up that cheap rate in a move. That effect has kept for-sale inventory depressed. As the days of 3% and 4% mortgages become more distant, the hope is that the lock-in effect will ease. Those who bought after mid-2022 usually have higher rates they're less wedded to hanging onto. And some people with ultra-low mortgage rates find themselves needing to move anyway, perhaps for a new job or if they're expecting a baby. But as of the end of 2024, more than half of homeowners are still hanging on to rates below 4%. 'By and large, sellers are still feeling that pressure of their low mortgage rate,' Jones said. Supply is up, but list prices aren't falling For-sale inventory has been rapidly increasing in recent years, giving prospective buyers more homes to choose from. While inventory hasn't quite returned to pre-pandemic levels nationwide, it exceeds that in certain regions, especially states in the South and the West. There, home price appreciation is slowing, and in some cases prices are falling outright. But in many parts of the country, prices are still rising. Median list prices remain near all-time highs. Coupled with higher mortgage rates, that leaves many buyers priced out. Some economists expect home prices to fall on a national level this year by 1% to 2%, a small help in an environment where prices are up about 38% from pre-pandemic levels. High mortgage rates have dramatically reduced buying power 'It is all about mortgage rates,' National Association of Realtors Chief Economist Lawrence Yun said after home contract activity had its worst April since 2009. 'Lower mortgage rates are essential to bring homebuyers back into the housing market.' A family making the median US income of around $80,000 could comfortably afford to spend around $2,400 a month on housing, using conventional affordability guidelines. If they put 15% down on their home purchase — roughly the average-sized down payment — they could afford to buy a home costing up to $543,000 with a 3% mortgage rate. But if their mortgage rate is 7%, their buying power goes down to $356,000. That's less than where the median home is listed today. At current mortgage rates, the median earner can't afford to buy the median home. Buying has rarely been so much more expensive than renting What's a priced-out buyer to do? In many cases, the answer is to rent. Buying a home has historically cost more than renting one, after factoring in maintenance, insurance, and other so-called 'hidden costs' of ownership. But the premium for ownership began rising rapidly alongside prices and mortgage rates in the aftermath of the pandemic. Historically, buying a starter home cost an average of $233 more per month than renting a comparable unit. In late 2024, that premium was over $1,000 a month, according to John Burns Research & Consulting. For homeownership costs to return to the historical average premium, mortgage rates would need to fall to 3.75%. In comments on Wednesday, Federal Reserve Chairman Jay Powell acknowledged the market's challenges. 'We have a longer-run shortage of housing, and we also have high rates right now,' Powell said. 'I think the best thing we can do for the housing market is to restore price stability in a sustainable way and create a strong labor market.' Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.
Yahoo
a day ago
- Business
- Yahoo
Why the housing market is so stuck, in 4 charts
The US is in the middle of the typical peak homebuying season, but all signs suggest that the market remains sluggish. Housing contract activity slipped sharply in April, even though buyers had more inventory to choose from. Meanwhile, buyers and sellers are locked in something of a standoff: More sellers are listing their properties, but prices haven't fallen much, and buyers are being picky. Mortgage rates aren't helping. They've held remarkably stable this year, hovering between 6.8% and 7%. Rate stability can be a good thing because buyers know what to expect when financing. But stability at relatively high levels prices many potential buyers out of the market altogether. Many would-be buyers find they're able to rent a much larger home than they could afford to buy. 'There was a little bit of a failure to launch feeling" this spring, said Hannah Jones, senior economic research analyst at 'High home prices persisted. High mortgage rates persisted. Economic uncertainty picked up. All of that we see reflected in the housing data.' What it will take to bring life back to the market isn't clear. Lower rates would certainly help, but there's little reason to think they'll return to 3% or 4% anytime soon, barring a deep recession. Recessions come with their own housing market tradeoffs, like higher unemployment that reduces demand and elevated mortgage delinquencies. Yahoo Finance compiled charts that illustrate how quickly the housing market shifted in the last five years, and why it's at a standstill now. Home price growth has outpaced wage inflation For decades, home price appreciation has been outstripping earnings growth. In the last 25 years, home values have more than tripled. The steepest climb came between 2020 and 2022, when pandemic moves and ultra-low mortgage rates spurred a buying frenzy across the country. Meanwhile, median incomes from 2000 to 2023 did not quite double. People with 3% mortgages are hanging onto them In recent years, the housing market has been stalled by what's known as the rate 'lock-in effect.' Anyone lucky enough to have a sub-4% mortgage rate at a time when prevailing mortgage rates are closer to 7% is reluctant to give up that cheap rate in a move. That effect has kept for-sale inventory depressed. As the days of 3% and 4% mortgages become more distant, the hope is that the lock-in effect will ease. Those who bought after mid-2022 usually have higher rates they're less wedded to hanging onto. And some people with ultra-low mortgage rates find themselves needing to move anyway, perhaps for a new job or if they're expecting a baby. But as of the end of 2024, more than half of homeowners are still hanging on to rates below 4%. 'By and large, sellers are still feeling that pressure of their low mortgage rate,' Jones said. Supply is up, but list prices aren't falling For-sale inventory has been rapidly increasing in recent years, giving prospective buyers more homes to choose from. While inventory hasn't quite returned to pre-pandemic levels nationwide, it exceeds that in certain regions, especially states in the South and the West. There, home price appreciation is slowing, and in some cases prices are falling outright. But in many parts of the country, prices are still rising. Median list prices remain near all-time highs. Coupled with higher mortgage rates, that leaves many buyers priced out. Some economists expect home prices to fall on a national level this year by 1% to 2%, a small help in an environment where prices are up about 38% from pre-pandemic levels. High mortgage rates have dramatically reduced buying power 'It is all about mortgage rates,' National Association of Realtors Chief Economist Lawrence Yun said after home contract activity had its worst April since 2009. 'Lower mortgage rates are essential to bring homebuyers back into the housing market.' A family making the median US income of around $80,000 could comfortably afford to spend around $2,400 a month on housing, using conventional affordability guidelines. If they put 15% down on their home purchase — roughly the average-sized down payment — they could afford to buy a home costing up to $543,000 with a 3% mortgage rate. But if their mortgage rate is 7%, their buying power goes down to $356,000. That's less than where the median home is listed today. At current mortgage rates, the median earner can't afford to buy the median home. Buying has rarely been so much more expensive than renting What's a priced-out buyer to do? In many cases, the answer is to rent. Buying a home has historically cost more than renting one, after factoring in maintenance, insurance, and other so-called 'hidden costs' of ownership. But the premium for ownership began rising rapidly alongside prices and mortgage rates in the aftermath of the pandemic. Historically, buying a starter home cost an average of $233 more per month than renting a comparable unit. In late 2024, that premium was over $1,000 a month, according to John Burns Research & Consulting. For homeownership costs to return to the historical average premium, mortgage rates would need to fall to 3.75%. In comments on Wednesday, Federal Reserve Chairman Jay Powell acknowledged the market's challenges. 'We have a longer-run shortage of housing, and we also have high rates right now,' Powell said. 'I think the best thing we can do for the housing market is to restore price stability in a sustainable way and create a strong labor market.' Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance. Sign in to access your portfolio
Irish Times
a day ago
- Business
- Irish Times
I'm smack bang in middle age without any property, ageing knees and a scant pension portfolio
About once a month I set the parameters on my favourite property apps to 'maximum €100,000' and 'all of Ireland' and set off on a mildly hopeful but largely depressing scroll. Through various means – significant savings built up during the peak of my recent success as an author, some family help, and maybe a credit union loan – I figure I could buy a home outright for a hundred grand. Isn't that the dream, to be mortgage- and rent-free? It is for me, a minimally attractive mortgage candidate smack bang in middle age without any property to my name, ageing knees and organs, and a pension portfolio so scant that my accountant once asked me with his eyes closed what age I was planning to retire at. The sub-100k properties for sale around Ireland right now have several things in common. A huge number of them feature what I like to call 'the aul lad chair'. It's a high-backed fireside armchair upholstered in dusty pink or pale green velvet, or maybe a busy floral brocade. It has seen much, much better days. The arms are dirty or well-worn, the seat is sagging, and there's a definite indentation where the aul lad used to rest his weary head. The aul lad chair is almost always situated beside a vintage Aga, the type that would sell for seven grand in its reconditioned state but has already been lost to rust and disuse. Atop the Aga there might be an ancient enamel saucepan and above it a sacred heart lamp. Above the aul lad chair and indeed evident and encroaching every room in the house is the real reason the property is so 'cheap', the sinister presence of damp and black mould . Even the listings where only the corners of the rooms seem affected and my heart jumps at the prospect of a house that might be immediately habitable, the blurb always features the damning phrase, 'requires extensive renovation'. A closer inspection usually reveals a juvenile oak tree growing out of the roof and a life-threatening electrical situation. These houses depress me for several reasons. I mourn their previous inhabitants, especially the properties where more glimpses of their lives are evident – blankets on beds, newspapers scattered on floors, personal hygiene items in frigid, burgundy bathrooms. That they've fallen into such disrepair is shameful, yet understandable. They're usually rural and remote, and probably needed renovation and modernisation while their final occupants were still alive. Grieving or absent families aren't in a position to maintain these houses, and vacancy sounds a speedy death knell. READ MORE I wish I had it in me to buy a crumbling cottage for eighty grand and renovate it beautifully, but I don't. It's hard enough to pin down a tradesperson in Dublin, imagine trying to do so in rural Roscommon or Longford, which is where many of these properties are. On the rare occasion when there is a somewhat turnkey house advertised it's usually prohibitively remote. The listing will try to sell it as an 'attractive potential holiday home or investment property', compounding one of the reasons we're in this crisis in the first place. [ Mark O'Connell: The housing crisis could erode Ireland's middle class to a point of collapse Opens in new window ] Grappling with the sums of money bandied about on the housing market is difficult to grasp. Day after day I see properties for sale for two, three, four million and I wonder who the people with that kind of budget are. One-hundred thousand euro is at once an unimaginable amount of money and a meaningless sum. Imagine all I could do with it, and yet it is a drop in the ocean of house prices. A friend who bought her house a few years ago maintains that after a certain point, the numbers become empty. You become so desperate that an extra 10, 20, 50 thousand seems acceptable debt to take on. You're going to be paying it off for the next 30 years anyway. I have a couple of friends at the bidding stage of their home-buying journeys and the tactics and greed of both estate agents and sellers are truly sickening. Bid deadlines mean nothing as long as someone is still coughing up. Modest, former council houses are pushing seven and eight hundred grand. I'm now faced with paying a sickening amount for a one-bed apartment in a Dublin suburb to stay relatively close to my friends and community or move several counties away for a little more space but a lonely existence. And with more than 15,000 people homeless in our country, I'm lucky with that, I know.
Yahoo
3 days ago
- Business
- Yahoo
How to negotiate a lower price when buying a house
When buying a home, negotiating the price of a house may feel taboo or outright uncomfortable. However, it's a common practice often expected by the seller. When prepared with the right strategies, you can walk into discussions confident and prepared. Here are helpful tips to help you negotiate the asking price and more as a buyer. Read more: Why are home prices so high? This embedded content is not available in your region. In this article: What to do before negotiating How to negotiate a house price How much can buyers negotiate? When to walk away FAQs A successful negotiation starts well before making your first offer on the house. 'Before a buyer even thinks about negotiating, get a preapproval letter and a crystal clear idea of the home's actual value,' Adriana Trigg, licensed Realtor and owner of Legionary Real Estate Investing, said via email. 'Don't just take what the home is listed for, but also understand what it's worth based on recent comparable sales and local market trends.' Apply for preapproval with multiple mortgage lenders for an estimate of your loan amount and mortgage rate based on verified income, creditworthiness, and other financials. You can then work with a real estate agent or use websites like or to research your local housing market and get an idea of how much the home is worth. There isn't just one way to negotiate a home's price, and certain situations call for different strategies. However, these tips may increase your chances of success. The best real estate agents are experts in the local market and the home-buying process. While every buyer should be as knowledgeable and prepared as possible, you can also lean on your agent to ensure you're not overpaying or overlooking critical details during negotiations. Find a real estate agent through referrals or a local online search. Verify the agent's license through your state's real estate regulatory agency. While a home inspection is not always required, it can be critical when negotiating the house price. An inspector can highlight anything from minor inconveniences to major foundation problems. 'One of my favorite strategies is to point out issues from the inspection report in a calm, fact-based way,' said Trigg. 'You're not insulting the home — you're pricing in the real cost of repairs.' Make a list of the significant issues, especially those that impact the property's value or your safety. You can use the inspection report to ask the seller to pay for repairs or come down on the asking price to cover the cost. You can also include an inspection contingency in your offer, which lets you walk away if the inspection reveals major damage to the home without losing your earnest money deposit. Repairs aren't the only costs a seller may be willing to cover. You can ask them to pay some of the closing costs, such as origination or appraisal fees. Other seller concessions worth exploring include prepaid property taxes, a home warranty, and even discount points to lower your interest rate. There's a limit to how much a seller can cover, and it varies by loan type. FHA loans: 6% limit on seller concessions USDA loans: 6% limit VA loans: 4% limit Conventional loans: 6% limit on loans with down payments between 10% and 25%; loans with less than 10% down have a 3% limit Ask for seller concession with discretion. Asking for too many can backfire, especially in a seller's market. Some sellers are willing to strike deals on certain fixtures or furniture used during staging. You can also use the time to close as a negotiation tactic. 'Another smart move is to offer a faster close,' said Trigg. 'A seller who's relocating or juggling multiple properties might take a slightly lower price if it means fewer headaches.' A seller's asking price can depend on many factors, such as the local housing market, the property's condition, and the length of time it has been for sale. For example, asking for 20% below the price is generally considered a lowball offer, but it may be appropriate for a home that needs a lot of work. A buyer looking at a home in good condition should probably ask for no more than 10% below the asking price, but be prepared for a counteroffer in a super-competitive housing market. You can start with a reasonable offer that's below the asking price, but not so low that the seller doesn't take you seriously. This is where having information on comparable sales and the property's condition can help — plus the help of a good real estate agent. Dig deeper: How much should you offer on a house? Negotiating the home price takes patience, compromise, and knowing when to move on. If the seller refuses to budge or you find yourself in a bidding war, take a step back to really think about whether you can afford the home. Try to avoid increasing your offer so much that you deplete your savings or struggle to make the monthly mortgage payment. When you walk away, make sure you know the potential legal ramifications. You can opt to include certain real estate contingencies in which your offer depends on the outcome of the appraisal or inspection report. If you back out of an offer for a reason not covered by contingencies, you could still end up owing money. How much a seller will lower the asking price depends on the market, the property's condition, and other factors. In a highly competitive market with more buyers than sellers, known as a seller's market, a seller doesn't have much incentive to come down on the price. On the other hand, if you're in a buyer's market with more homes than buyers, you typically have more leverage to ask for a lower price, within reason. You can tactfully negotiate the price on a house by making sure your offer is reasonable. Base your offer on similar homes that sold recently in the area. When you ask for a lower price, justify it, like with the inspection or appraisal report. Share how the ask can help you both, like speeding up the time to close. Offering 20% below the asking price may be acceptable if the home needs major repairs. Make sure your offer is justified. However, in highly competitive markets where the seller has multiple offers, you may have a hard time lowering the price even if the home needs significant work. Laura Grace Tarpley edited this article.
