What can I negotiate?

Question

Meghan McCallum · Answer

EVERYTHING! Negotiate w your lender yes. Tell them that you are shopping but you are looking to form a long lasting mutually beneficial relationship, you need to know with the seller, the tenant, and the lender YOU are the prize. YOU are the asset not the liability. Plus, if your lender isn't willing to entertain a negotiation, then how would they be able to have faith in your negotiation skills with sellers? When negotiating with sellers (listen to podcast #77 if you haven't) find out what they need from you, its not always money. Sometimes its the speed of the deal, sometimes they want you to buy all the furniture from their passed mom's house that they are selling, sometimes they want to sell to you but "rent back" the house for $1 a month for three months while they find a new home.

Your negotiation is all dependent on YOU finding their real problem (sometimes it is $) and solving it.

Chris Mason · Answer

Oh, really? :P

We beat him on both rate and fees without any back and forth bla bla bla, so it was all a waste of Peter's time. Even if he was $200 better for the same rate, no one wants to deal with that back and forth nonsense.

The two basic models in the mortgage industry are to either give the best interest rate pricing available out of the gate and not budge, or be above market initially and let them negotiate down to the real price (that you could have offered upfront) after a bunch of used car lot nonsense.

The problem with the BofA model favored by the "Assistant Vice President" Peter guy is that it's basically "we're going to screw you unless you force us to give you a fair deal." It's not 1985 any more. I'm unclear on why that model is even still alive. It just pisses people off, and creates an adversarial rather than collaborative atmosphere, more than anything.

Frankly, I think the wiser model is just to offer the real price up front. We're too busy dealing with compliance and CFPB nonsense to waste time on interest rate pricing. Not the highest and best use of a lender's time, IMO, and consumers hate that game anyways.

Jeff Wallenius · Answer

@Justin S. everything has a price. I would not be afraid to negotiate any item in the process of buying a house. In our area the low ball offers are going to be difficult to stick. Too much competition and the market is too hot to try and low ball any seller. You will have a difficult time finding a real estate broker to write a bunch of low offers as it is not worth their time. Best of luck!

Ned Carey · Answer

The bigger the entity you are dealing with the less negotiable they will likely  be. So yes you can negotiate interest rates with a lender but bank of America won't budge. The local bank with 1 branch may.

Some examples of things that are negotiable in a contract to buy or sell.

• settlement date 
• earnest money deposit
• who pays which closing costs
• What date are the pro-rations based on contract or settlement date.
• Are there any contingencies
• How long are the contingencies
• who pays back taxes or other debts on the property.

These things may not be as important to you as to the other party so trade them for terms that are important to you.

Russell Brazil · Answer

As everyone said everything is negotiable....but let's not forget you might not be on the winning side of that negotiation. Negotiating is a two way street which many people forget.

Chris Parrish · Answer

@Justin S., I agree with @Jeff Wallenius that in the Portland area, it is tough to get low ball offers to get any attention. And yes, as a broker, its difficult writing offers that I know won't get accepted. haha However, the market has cooled off a bit and it is becoming less of a dominated sellers market.

But some things to consider asking for are - closing costs (thats a big one!), appliances, repairs, upgrades, any furniture items you want, etc. I have had deals where we asked for cars or tractors to be included and they have been! So, you can essentially ask for anything.

John D. · Answer

+1 @Justin S.

Everything is negotiable!

Meghan McCallum · Answer

@Justin S. You don't compete with buyers when YOU find the seller off market. Word of mouth, bandit signs, a small ad in the newspaper (old folks who want to downsize or get out of the rental the've had for 30 years STILL READ THOSE. The devil is in the details as much as the fun is in the creation of deals and the hustle to find them.

Also, join a real estate investment group, find a RE agent who owns a good number of rentals and is a likeminded investor. Everywhere is hot right now. RE is sexy $ and every TV network as a crappy flipping show (JoJo and Chip I still love you guys). But, there are brokers and agents who will just make a verbal offer and save you the paperwork.

Don't take no for an answer in this game, as soon as you do you've lost because when you get told you can't and walk away the next guy walks up and says how can I and he goes home with the deal.

Steve Milford · Answer

@Justin S. what @Chris Parrish said. Every single thing is negotiable. The caveat is that you have to ask for it to get it, and a lot of people don't want to take the time to do that because it often means you get picky. You need to find out what the true need is. You may have heard that deals are made or lost when you make them. This includes not only price, but the details of the contract as well. Creativity in contracts is only limited by your imagination. Worst case, when you ask, is that they say no. And the type of deal you present, even in lending, is a huge factor. i.e. I am currently seeing more Conv. mortgage deals stick at a lower price, than FHA ones at a higher price on the same property.

Figure out how to really negotiate. The first step is getting someone to agree to your contract offer based on first look. The second step is to negotiating the finer details and problems that come up so that everyone feels like they "get something". And the last step is seeing the contract through to closing. As a Realtor, I haven't lost a deal yet, but I also micromanage it and negotiate every little nuance until it is done. Personally though, I have walked away or cancelled more than my fair share of them when they turn south mid-way through.

Negotiating with a lender (in my experience) is usually not property specific - it is more based on what you have to bring to the table and who the lender is. Don't like your terms? Walk out door!

What can I negotiate?

Most Popular Reply