Mortgages

4 Things Homebuyers Should Never Say

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You don’t need to be a world-class negotiator to nab a great deal on your dream home.

More often, it’s a matter of knowing what not to say. One errant comment or paperwork misstep can compromise your negotiating position. Playing it close to the vest around home sellers and listing agents is critical.

So is flexibility. Homebuyers who conflate wants and needs can cost themselves big time.

Here’s a look at four messages and mindsets buyers should avoid broadcasting.

1. “I’m Not Pre-Approved”

Prospective homebuyers who shop for homes before getting pre-approved can put themselves at a disadvantage from the outset.

Real estate agents and home sellers prefer strong buying candidates who are likely to make good on their purchase offer. Agents and sellers will often want to see a copy of your pre-approval letter alongside your offer. A pre-approval letter signals that a potential buyer has the credit, income and assets necessary to stir confidence in a mortgage lender.

A homebuyer without that confidence is a total wildcard. There are no guarantees when it comes to pre-approval and purchase offers, but the buyer who looks like a better bet will often reap the rewards, especially if there are competing offers.

2. “I’m Pre-Approved for This Exact Amount”

That pre-approval letter is a critical document. But what exactly it details is also incredibly important.

Homebuyers can shop with more certainty when they know how much a lender is willing to extend. But that ceiling isn’t a figure that sellers need to know. In fact, you can squander goodwill and compromise your negotiating position by including a pre-approval letter for more than your offer.

Market and specific property notwithstanding, buyers will often make a first offer below the list price. Put yourself in the seller’s shoes: Imagine getting an offer at or below your $150,000 list price from a buyer who’s been pre-approved for $250,000. You’re practically begging the seller to push back hard.

Instead, submit a pre-approval letter that matches the amount of your offer, or refrain entirely from using a dollar amount. Lenders can tailor these for specific properties and amounts up to your max. There’s little benefit to telling sellers you can pay more than you’re offering.

3. “I Can’t Live Without This Home”

Falling in love is easy when you’re shopping for homes. But fixating on one and only one property is likely to hurt your chances of landing a good deal. It’s not even so much a concern about sellers or their agents catching wind (although that’s certainly a reason to stay silent if you’re touring homes when a seller or listing agent is present).

It’s more that being inflexible is bad for business. Buyers who say they “must” have a certain home can have a tougher time being objective. That can lead to big-time imbalance at the negotiating table.

4. “This Is My Forever Home”

This is a sweet sentiment, and you very well may intend to spend the rest of your life in your new home. But lives, circumstances and finances all change. People get divorced or lose their jobs.

Only about a quarter of homebuyers in 2013 planned to stay in their home for at least 16 years, according to the National Association of Realtors. More than four in 10 said they didn’t know their expected tenure.

Resale should always be a consideration regardless of your best intentions. A day may come when you have to put your forever home back on the market.

Keep this in mind with unique properties or homes with uncommon features, which could become hurdles down the road.

More on Mortgages and Homebuying:

Image: Randy Faris/Fuse

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