What can you negotiate for during a sale?

Buyers and sellers have more power in real estate negotiations than most people realize. Beyond arriving at an agreeable price for a home, the process provides opportunities for both parties to request concessions or stipulate their needs.

Tiffany Pantozzi, an agent with Align Real Estate in Orlando, is the co-creator of Contract Close Champagne, a training program for real estate agents on negotiations, specifically outlining the tools available to achieve the best outcomes for both buyers and sellers in a sale.

“It’s a negotiation,” Pantozzi said. “You can ask for anything you want. You’re not always going to get it, but you can always ask.”

Speaking with Homes.com, the award-winning agent touched on a few things that can be haggled in a sale:

If the property you want has or is likely to receive multiple offers, you can make a bid with a clause that states you will pay over the highest proposal, typically in $1,000 increments, up to a maximum price.

For example, you have offered $400,000, but you could potentially go to $425,000. You can inform the seller that you will pay $1,000 more than any offer that exceeds your initial price of up to $424,000. That way, you don’t lose the house if someone offers $401,000, but you don’t have to shell out the full $25,000 extra if no one else is going that high.

“What’s cool is that the addendum will require the selling agent to provide the competing offer that triggered the escalation,” Pantozzi said. “Sometimes, [the sellers] are playing chicken. [Without the clause], we don’t know if they really have another offer.”

Pantozzi considers the escalation clause such an important tool that Contract Closing Champagne provides an explainer on it for free. “It’s my favorite clause,” she said.

One drawback of an escalation clause, however, is that buyers may risk overpaying and revealing their budget ceiling to the seller.

“Everything you see in a home is negotiable,” Pantozzi said.

Does the homeowner have an oak table that completes the dining room perfectly? Ask them to throw it in. Art, plants, that clown doll tossed haphazardly in the corner that adds the exact amount of surreal macabre to your new lair, it can all be factored into the price.

“I’ve seen people include boats, golf carts,” Pantozzi said. “People include crazy things.”

Which doesn’t mean that every seller is willing to sell their stuff. Sellers will sometimes specify that an object, such as a chandelier or custom-made drapes are too dear to part with, according to Pantozzi, "but you can still ask for it, because you never know.” 

Buyers and sellers have a number of fees they have to pay at closing. “In addition to the down payment [the buyer] is going to have to make for their loan, there’s also lender’s fees, title fees, just tons of fees,” Pantozzi said.

Sellers looking to make the deal more attractive, or buyers wanting to save, can negotiate money for those fees, according to Pantozzi.

But it’s not as simple as free money. Lenders often have rules regarding how much money can come from the seller. Loan-to-value ratio limits can impose specific caps on concessions.

Other problems can arise if the value of a home is inflated to include the credits, pushing it past the appraisal value, which is usually the limit a lender will cover.

“You’ll always have to check with your lender before writing the offer in terms of how much money you can use,” Pantozzi said. 

Related: What closing costs does a home seller pay?

“Outside of the home negotiation itself, your lender will have fees,” Pantozzi said. “Can you negotiate them? Absolutely.”

Buyers and sellers are the only ones trying to settle on a price. Every party that is charging something involved in the sale can be dealt with independently.

“There’s a lot of fat in fees,” Pantozzi said. “Just like a buyer and a seller can negotiate the commission for a Realtor, they can negotiate the fees that are commissioned for the mortgage or the title company. You’d be surprised what we’ve gotten out of lenders.”

Related: How to negotiate the commission you pay

Interest rates in the high sixes have been blamed for some of the slowdown in the real estate market. However, a seller can pay money to the lender to lower a buyer’s rate, typically for the first one to three years.

“These are awesome. They’re very underutilized because people don’t understand them,” Pantozzi said.

Sellers, however, need money to do this, so sometimes a buyer needs to offer more than they wanted to, Pantozzi said. “These get tricky in terms of what offer are you going to make to that seller to allow them to have that amount of money to contribute.”

Ultimately, though, she said the long-term benefits of lower mortgage payments often outweigh the increased price. “It’s way better than getting a discount on the sale price, because what you’re saving on your mortgage payment is tremendously different.”

If you offer $400,000 for a home, but it is appraised at $380,000, someone has to come up with the $20,000 for the sale to go through.

With an appraisal gap contingency, the buyer can agree before the appraisal is called in to cover the gap between the price and the assessed home value out of pocket. Or the buyer could back out.

“Of course, you have to verify funds to make sure they have that additional cash because it might be above what you were approved for in financing,” Pantozzi said. “It makes the offer stronger. It lets the seller know that this person really wants it."

Florida offers what is known as the As-Is Residential Contract for Sale and Purchase, which allows sellers to say they are selling their home in its current condition with no obligation to make repairs. Every state has a version of this contract with varying rules regarding disclosures and responsibilities.

Does everyone still ask for things after the inspection period is over?

"All the time,” Pantozzi said.

Buyers can ask sellers to make repairs or do extensive cleaning, and they can also ask for money to do that work.

But Pantozzi warns that buyers should not press their luck.

“Of course, if you really want the house, you have to be realistic.”

She also said that asking for repairs requires you to trust that the seller will make them correctly. “We come across sellers that, given the way they have treated their house, we don’t want them fixing anything because it won’t be up to our standards.”

Often, sellers need to sell their house before they can buy a new one. But once it’s sold, they need to stay in the old one for a little while until they can find and close on a new one.

"Post-occupancy" or "rent-back agreements" allow the seller to pay to stay in the home for a specified period.

“For the new homeowner, it is definitely risky to allow someone to do that,” Pantozzi said. “I’ve seen it work wonderfully, and I’ve seen it work terribly.”

The agreement turns the new owner into a landlord, one that didn’t get a deposit for any damage the “tenant” might do. Pantozzi said a buyer might negotiate to withhold some of the funds for the price of the house until the old owner has vacated the property, with the property still in good condition.

The buyer must also ensure that they have insurance that will cover the agreement. “There is a lot of liability around it," she said.

Sometimes, it’s the buyers who need the house before they actually own it. “A lot of times people will say, ‘I’m going to close on this date, but I just want to bring over some furniture and start moving things in,’” Pantozzi said.

Similar to the risks of a rent-back agreement, a seller should be careful about letting a buyer access the property before the deal is closed. Imagine a buyer plugging something in that starts a fire. What stops them from walking away from the sale, leaving the seller with damaged or destroyed property?

“It’s never ideal,” Pantozzi said. “It really goes back to your confidence in the buyer.”