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LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

How to Negotiate a House Price

Updated on:
Content was accurate at the time of publication.

Knowing how to negotiate a house’s price can help you land your dream home while staying within your dream budget. With some upfront preparation and research, you can avoid overpaying or, in a worst case scenario, offending the seller and losing out on the house altogether.

We’ll share some essential negotiation tips and ways to strategize based on your specific homebuying situation.

1. Gather information before you negotiate

Having upfront knowledge about the market you’re buying in can help you set your boundaries and understand the seller’s strategy. Here are key points to research:

  • Details about nearby home sales. Ask your real estate agent to provide a comparative market analysis (CMA). A CMA details the sales price for similar homes in the area, how long it took for them to sell and how close the final sales price is to the listing price.
  • Whether you’re in a buyer’s or seller’s market. In a seller’s market, there are more buyers than available homes, which typically means you have less negotiating power because sellers get to entertain multiple offers. A buyer’s market is the reverse: There are more homes than available buyers, so sellers are more likely to offer closing cost credits or other incentives to make their homes more enticing.
  • How much you can borrow. If you need a mortgage to buy a home, have your mortgage preapproval letter ready before you make an offer. This will tell you how much you can borrow and lets the seller know you’re a serious buyer.

 Use our mortgage calculator to estimate your monthly payment and see how much you could afford.

2. Make an initial offer that will stand out

You only have one chance to make a first impression. While an offer far above asking price will certainly help you stand out, it’s not the only way you can make your mark:

Offer a larger earnest deposit. Earnest money is a portion of the home price that you pay upfront, and you can think of it like the real estate version of putting your money where your mouth is. Sellers may take your offer more seriously if you’re willing to show that you have more skin in the game.

Make a bigger down payment. A down payment of 20% or more can signal to the seller that you have additional financial resources. Sellers want to work with a buyer that won’t fall through, and they know that deep pockets can help facilitate that.

Be flexible on your closing date. Some sellers want a quick closing, while others may need to line up the sale of their current home with the purchase of a new one. A little wiggle room on your part could make yours the winning offer.

Add a personalized letter. Although there’s no guarantee it’ll make a difference, a letter explaining how much you appreciate the home and why they should consider your offer may tug at the seller’s heartstrings — especially if they have an emotional attachment to the home they’re selling.

Limit contingencies. A seller may reject your offer if it comes with too many strings attached. Making your offer conditional on selling your current home, seller-paid closing costs or the house’s appraised value may not be a competitive position in a seller’s market.

Add an escalation clause. If you’re in a bidding war, this type of clause allows you to automatically raise your offer (up to a maximum limit) if a competing offer comes in.


3. Decide how you’ll respond to counteroffers

If the seller doesn’t accept your initial offer, they may make a counteroffer. In other cases the seller could accept your first offer, but problems down the line —like issues uncovered during a home inspection or appraisal — can send you back to the negotiation table.

How to negotiate a counter offer

Typically, a seller might counteroffer in one of five ways. The table below shows how you can respond to each:

Type of counterofferHow you can respond
Higher sales price
  • Give some ground. If the seller brings the sales price back to their original amount, you can assume they don’t want to negotiate
  • Take some ground. If they’re meeting you halfway, you can accept or keep haggling
Change in closing date
  • Give some ground. If you have flexibility in your moving timeline, accept the revised date
  • Take some ground. Make a counteroffer with a date that works for you
Reduction or rejection of seller-paid closing costs
  • Give some ground. Reduce the amount you request, or waive the contingency altogether
  • Take some ground. Ask the seller to meet you halfway
Rejection of other contingencies
  • Give some ground. Accept the removal
  • Take some ground. Counter with fewer contingencies
Higher earnest money deposit
  • Give some ground. Pay the requested higher amount
  • Take some ground. Counteroffer with a lower earnest deposit

If the home comes back with home inspection issues, your negotiation options include:

  • Requesting repairs. Decide if you want every inspection issue fixed, or if it makes sense to focus on a few important items (like a leaky roof or exposed electrical wires).
  • Adjusting your purchase price. This is essentially making a counteroffer to offset the cost of the needed repairs. Your real estate agent should give you guidance on how much of a reduction to request.
  • Asking for a closing cost credit. Find out if the seller is willing to pay a percentage of your closing costs equal to the estimated cost of repairs, then make the fixes after buying the home.
  • Walking away. If the seller refuses to negotiate after the inspection, you can usually walk away and get your earnest money back from escrow.

Most mortgage lenders require a home appraisal, and if the value comes in below the agreed-upon purchase price, you have four options:

  1. Pay the difference out-of-pocket. Lenders won’t lend you more than a home is worth, so if you still want to move ahead with the purchase this may be your only option — especially if you waived all contingencies when you made your initial offer.
  2. Ask the seller to meet you halfway. This request could just lead to some haggling back and forth, but it will tell you whether the seller is willing to compromise. They may be motivated to avoid losing you and restarting the selling process.
  3. Dispute the appraisal or get a new one. A home appraiser may have missed a recent sale or incorrectly calculated the square footage. You can always discuss disputing the value with your loan officer if something doesn’t look right. You also have the option to order a new appraisal.
  4. Cancel the contract. If your contract contained an appraisal contingency — great! You played it safe and came out on top because you can now cancel without losing your earnest money.

  Unsure what lender to choose? Read our guide on how to choose a mortgage lender.


Even in the most competitive market, you should still negotiate a house price to:

  1. Reduce your closing costs. Lender closing costs usually run between 2% and 6% of your loan amount. Even if the seller doesn’t agree to pay them as part of your initial offer, they could have a change of heart if issues pop up during the home inspection process.
  2. Have more control over the closing timeline. If you have kids starting school or another time-specific issue that could affect your closing, you should make it a part of your offer.
  3. Set contingencies upfront. You’ll need to state your contingencies in advance and in writing for them to be legally binding. If you don’t and an issue comes up that wasn’t addressed in your contract, you might have to forfeit your earnest money if you walk away. In a worst-case scenario, the seller could even sue you.
  4. Compensate for repairs and upgrades. If you’re buying a home that needs repairs and the seller disclosed them upfront, they may accept a lower offer to compensate you for the repair costs.
  5. Save on your monthly payment. A lower sales price typically means a lower mortgage payment, since you’re borrowing less.

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Your real estate agent likely has a sense of just how low sellers in your area are willing to go, but don’t push it too far — if your offer is so low that it insults the seller, you’ve already lost. Instead of pushing for the maximum amount a seller might come down, try to find a zone of overlap between your interests and theirs. Ultimately, a seller wants to receive a fair and reasonable offer.

This will depend on your financial resources, your motivation to buy the home and the market you’re buying in. In a seller’s market, you can expect to offer over the asking price. If you’ve found your “forever home,” no matter the market conditions, the amount may only be limited by how much you’re willing to spend.

You should walk away if the price is outside of your budget, you feel the seller is being unreasonable or you simply aren’t getting what you need out of the deal. You should also watch out for title issues, deception on the part of the seller or catastrophic problems with the home’s condition.

Your real estate agent will coordinate your offer with the appropriate parties on the seller’s side. The agent typically drafts an offer in the standard purchase contract format for your area, have you sign it in person or electronically and then submit it to the listing agent representing the seller.

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