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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

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Once you’ve found your dream home, the next most important step is to offer the right price.

3 tips on how to negotiate a house price

1. Get the facts together before you start negotiating

The home offer process can be stressful if you aren’t prepared for it. Sellers may be reviewing several offers, so make sure you’ve done your homework ahead of time.

  • Ask your agent for detailed market information. Your real estate agent should provide a comparative market analysis (CMA). A CMA can show you what similar homes are selling for, how long it took for them to sell and how close the final sales price was to the original asking price.
  • Determine 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 as sellers entertain multiple offers. A buyer’s market is the reverse: More available homes make sellers more likely to offer incentives like closing cost credits to make their homes more enticing to prospective homebuyers.
  • Have your preapproval ready. If you need a mortgage to buy a home, make sure you’ve got your mortgage preapproval letter ready before you make an offer. This will tell the seller you’re a serious buyer and have the resources to purchase the home.

2. Make a strong offer

You only have one chance to make a first impression on a home seller, and these tips may help strengthen your purchase offer:

  • Offer a larger earnest deposit. This is the real estate version of putting your money where your mouth is. Sellers may take your offer more seriously if there are more upfront dollars in escrow from the outset.
  • Make a bigger down payment. A down payment of 20% or more may tell the seller you’ve got more financial resources to complete the purchase.
  • Be flexible on your closing date. Some sellers want a quick closing, while others may need to slow down the sale of their current home to time it with the purchase of a new one. A little wiggle room on your part could get you 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 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, especially in a seller’s market. Avoid making your offer conditional on the sale of your current home, seller-paid closing costs and even appraised value requirements.
  • Add an escalation clause. If you’re in a bidding war, this clause allows you to automatically raise your offer price up to a maximum limit.

3. Decide how you’ll respond to counteroffers

If your initial offer isn’t accepted or rejected, the seller may make a counteroffer on the house. In other cases, problems discovered during a home inspection or home appraisal may send you back to the negotiation table. How much you can negotiate depends on a number of factors.

  • How to negotiate a counter offer. There are typically five ways a seller can counteroffer. The table below shows how you can respond to each:

Type of counterofferHow you can respond
Higher sales price
  • If the borrower counters back to their original sales price, they don’t want to negotiate
  • If they meet you halfway, you can accept or keep haggling
Change in closing date
  • If you have flexibility in your moving timeline, accept the revised date
  • Make a counteroffer to a date that works for you
Reduction or rejection of paying all or any of your closing costs
  • Reduce the amount you request, or waive the contingency
Rejection of contingencies
  • Accept the removal
  • Counter back with fewer contingencies
Higher earnest money deposit
  • Pay the higher amount requested
  • Counter back to a lower earnest deposit

  • How to negotiate the house price after the home inspection. You have a number of choices if the home comes back with home inspection issues. You can:
    • Request repairs. Decide if you want every issue identified in the inspection fixed, or focus on the items that are most important (like a leaky roof or exposed electrical wires).
    • Request a lower sales 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.
    • Request a credit toward your closing costs and repair the problems later. This involves asking the seller to pay a percentage of your loan closing costs equal to the estimated cost of repairs.
    • Walk away. If the seller isn’t willing to negotiate after inspection, you can usually walk away and get your earnest money back.
  • How to negotiate with a seller after a low appraisal. Most mortgage lenders require a home appraisal, and if the value comes in below the purchase price you agreed to with the seller, you have four options:
    1. 1. Pay the difference. This may be your only option if you waived your contingencies when you made your initial offer.

      2. Ask the seller to meet you halfway. You may end up haggling back and forth, but the seller may be willing to compromise rather than start the selling process over.

      3. Dispute the appraisal or get a new one. A home appraiser may have missed a recent sale, or incorrectly calculated the square footage. Discuss disputing the value with your loan officer if something doesn’t look right. Alternatively, you can see if you’re able to have a new appraisal completed.

      4. Cancel the contract. If your contract contained an appraisal contingency, you should be able to cancel without losing your earnest money.

How to submit an offer on a house

Your real estate agent will coordinate your offer with the appropriate parties on the seller’s side. Typically they’ll draft up 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 agent representing the seller (usually called a listing agent).

Make sure you provide your preapproval letter and any personalized buyer letter you want the seller to read. The contract usually sets a time limit for the seller to review and respond to your offer.

Why you should negotiate a house price

Sellers receive an average of nearly four offers per home sold, according to the National Association of Realtors (NAR) Confidence Index Report for October 2021. While the competition may limit your haggling power, you should still negotiate a house price:

  • To reduce your closing costs. Lender closing costs usually run 2% to 6% of your loan amount. Even if the seller doesn’t agree to pay them as part of your initial offer, they may throw some money at them if repair issues pop up in the home inspection process.
  • To have more control over the closing timeline. If you’re taking out a 401k loan for your down payment, or if you have kids starting school or another time-specific issue that could affect your closing, you should make them a part of your offer.
  • To set contingencies upfront. You’ll need to disclose any 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 may lose your earnest money and even be subject to a lawsuit by the seller.
  • To compensate for repairs and upgrades that need to be done. If you’re buying a home with deferred maintenance or issues the seller disclosed upfront, the seller may accept a lower offer to compensate for upgrades and repairs they know are required.
  • To reduce your monthly payment. A lower sales price typically means a lower mortgage payment.

FAQs about negotiating a home price

  • How long can a realtor sit on an offer? Your real estate agent should set a timeline for the seller to respond. Real estate agents may request additional time if they’re receiving multiple offers.
  • How much over asking price should I offer? This will depend on your financial resources and motivation to buy the home. If you’re buying your dream “forever” home, the amount may only be limited by how much you’re willing to spend.
  • When should I walk away? You should walk away if the price is outside of your budget, you feel the seller is being unreasonable or you simply don’t have the money to pay more than you offered.

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