Negotiating a Sales Price
Before you negotiate a sales price, it’s important to determine if you or the seller has the stronger position. Knowing this will help you plan your negotiation.

The seller may have the stronger position if:

• The local real estate market is strong and homes are selling quickly.
• They aren’t in a rush to move.
• Similar houses have sold for close to or above their asking price.
• There are other offers being made on the house at the same time as you.

The buyer may have the stronger position if:

• The local real estate market is weak.
• The seller needs to move quickly.
• The house has been on the market for a long time.

When negotiating, more information is better. Look at your notes from when you looked at the house. If there’s anything that needs to be repaired or replaced, you may want to consider including these costs in the negotiation. If you want certain appliances or fixtures to stay, be sure to include them as well. You may also want to make your offer contingent upon your obtaining financing or the house passing a professional home inspection, especially if it is an older home.
There are several steps to negotiating:

• Asking price.
This is the price the sellers have originally listed. In a buyer’s market, you may be able to successfully offer below the asking price. However, in a seller’s market you may want to be prepared to offer more. Before making an offer in a seller’s market, know how much above asking price you are willing, and able, to bid in case the seller gets multiple offers.
• Initial purchase offer.
This is your first offer. It may include contingencies (such as a requirement that the home pass a professional inspection or that you receive adequate financing from your lender.)
• Acceptance of offer or counter-offer.
The seller can accept your offer or make a counter-offer of a new price or additional contingencies.
If you’ve made a home inspection part of the contingencies and something serious is found during the inspection, you may want to submit a new counter-offer and discuss the situation with your lender. The process may go back and forth several times before you and the seller reach an offer that is acceptable to you both. Remember that in some instances, your lender may not approve your mortgage if the home has serious deficiencies that could affect its value.

Your real estate agent will assist you in making an offer, which will include the following information:

Complete legal description of the property
Amount of earnest money
Down payment and financing details
Proposed move-in date
Price you are offering
Proposed closing date
Length of time the offer is valid
Details of the deal

Remember that a sale commitment depends on negotiating a satisfactory contract with the seller, not just making an offer.
Earnest money is money put down to demonstrate your seriousness about buying a home. It must be substantial enough to demonstrate good faith and is usually between 1-5% of the purchase price (though the amount can vary with local customs and conditions). If your offer is accepted, the earnest money becomes part of your down payment or closing costs. If the offer is rejected, your money is returned to you. If you back out of a deal, you may forfeit the entire amount.

Home warranties offer you protection for a specific period of time (e.g., one year) against potentially costly problems, like unexpected repairs on appliances or home systems, which are not covered by homeowner’s insurance. Warranties are becoming more popular because they offer protection during the time immediately following the purchase of a home, a time when many people find themselves cash-strapped. With the Wickland Group every home buyer receives a home warranty because Steve Wickland cares about his clients.

If you have been considering purchasing a home in the Ann Arbor area you may be interested in knowing that the National Flood Insurance Program expired May 31. There seems to be some question as what home buyers will be doing and for how long. Mortgage companies can require flood insurance which will have to be purchased through private insurance companies for the time being. This could delay your closing. Be prepared. Here is the story below from Mortgage News Daily:

The National Flood Insurance Program is back on the front burner, since it expired on May 31, and, to the best of my knowledge, starting yesterday the NFIP did not have authority to issue new or renewal policies. Flagstar told its broker clients that “new policies will not be able to be obtained until at least June 7th, 2010. Paid receipts accompanying flood applications must be dated prior to June 1, 2010.” SunTrust told clients that “SunTrust will not purchase any loan where the structure resides in a Special Food Hazard Area without proof of flood insurance coverage in the loan file. Unless the borrower has obtained “private” flood insurance, the closing must be delayed until a declaration page is received for the required amount of insurance and the correct flood zone, or until such time funding for the NFIP is restored and SunTrust announces it will accept a copy of the application for national flood insurance along with a copy of the check for the premium.”