Home buyers and sellers often spend most of their time and focus on negotiating the purchase price of a house, and while that is often the deal maker or breaker, there are quite a few other negotiating points which may actually close a real estate transaction.
However…. You can be as creative as you choose, but price is the starting point.
Home sellers often have a bottom line price they will accept. However, some are much more motivated than others. Some may be bordering on the verge of a short sales. Some may be behind on payments. Others could have significant equity, but have a life changing event motivating them. Others are willing to take a “loss”, because they know they will make it on on their next purchase. In my experience, you have get your first offer in writing to them to see how the seller is going to respond.
Buyers either have been pre-approved for a maximum purchase price, have a set amount of cash available, or have investment guidelines that determine just how much they can pay for a house profitably.
Getting into the mutually agreeable ballpark is critical, and then there are number of other negotiating points that may prompt a seller to accept an offer that is slightly less than desirable, or prompt a buyer to offer a bit more than they were hoping to.
- Closing Date
Some sellers want to get out as quickly as possible, while others need extra time to find a place to find another home, or are waiting for a new home to be completed. Knowing the closing time frame that the seller needs or wants is very helpful. A buyer’s agent can inquire, and many times a seller’s agent will share this info. - Possession Date
In the case of post-possession (or lease back), many home buyers are purchasing their as a primary residence, which is how their loan is being approved and insurance policy is written. Some lenders and insurance companies may allow a few days for the property to transition. The buyer and seller should always get this info in writing, if the property is changing hands on any other day than that of the Close of Escrow, or recording.Pre-possession creates a risk for the seller. What if the buyer’s loan doesn’t get final approval? Suddenly, the home seller is now a landlord.Pre-possession and post-possession are tricky. - Earnest Deposit
Buyers often ask just how much earnest money should they offer. The earnest deposit is considered a show of good faith, and can be interpreted by the seller as a gauge of buyer motivation or financial position. With the Arizona real estate contract, the buyer has a good number of contingencies, so there are some protections. However, a buyer also should know that this deposit is “at risk”. - Down Payment
Down payments vary by loan type. FHA loans currently require 3.5% down. Conventional loans can occasionally be found with a 10% down payment requirement, although 20% down is much more common. Some buyers will choose to put down more than the minimum required to match their financial objective. While down payment is not typically a negotiating point, it’s another place that a buyer can strengthen their offer, in a way that sellers (and lenders) could view positively. - Payment Type
In today’s real estate market, there are three common loan types, cash, FHA, and Conventional financing. VHA and seller carryback are two other ways to purchase a house, but are less common. Some sellers feel more confident with a cash offer, while others seem to have no preference, and look to the bottom line. Others prefer conventional to FHA financing, due to the stricter property condition requirements needed for that loan approval. Buyers may qualify for conventional financing, but choose to go FHA to maintain a better cash position, especially if they would like to have cosmetic work done on the house. - Personal Property
Some sellers view offering their personal property as an incentive to the buyer. If the property is a vacation or second home, and furnished beautifully, a buyer may be interested. Or not. Another negotiating point.Buyers, on the other hand, may spot personal property that they would like to have the seller leave behind, and may ask for it in the contract.In the Arizona contract, refrigerators, washers and dryers, are considered personal property, and the contract makes it clear that the buyer can request these items as part of the offer. - Buyer’s Costs, including Loan Costs, Closing Costs, and Pre-Paid Charges
Asking the seller to contribute to the buyer’s closing costs, is fairly common these days. Especially on FHA contracts. Sometimes, you will even see homes, where a motivated sellers, offers to assist with closing costs. - Appraisal
The buyer can waive the appraisal contingency, and in today’s market with the new appraisal rules, some seller may find this offer very attractive. - Inspection Period
The default inspection period in the Arizona purchase contract is ten days. Some buyers can sweeten the offer by shortening the period, or an out-of-town buyer may ask for additional time. On rare occasions, a buyer may waive the inspection period. - HOA Transfer and Capital Reserve Fees
HOA fees vary significantly from community to community. Buyer may ask the seller to cover. Seller may agree, or the two parties can split these home owner associations costs.
This list is not at all comprehensive, but it should be a good starting part for creative thinking that may be need for you to successfully buy or sell a home in Arizona.
DISCLAIMER! Please note that this information is strictly based on my opinion and experience, and should , in no way, be construed as real estate guidance or counsel. Ask your Realtor for any clarification, and seek appropriate legal and financial guidance from an attorney or CPA who is well-versed in Arizona real estate.
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