Negotiating Your Home Purchase Offer

Negotiating your home purchase offer is a key part of the buying process. The purchase offer includes more than determining the selling price.  As a buyer, you are also setting the terms that may make your offer more competitive or address your concerns in purchasing a specific property.  In other words, negotiating for your best interests in this process.

Offer Price

The first element of negotiating your home purchase offer is determining the offer price.  Hopefully, the asking price of the home is in line with the current market value but this should be verified by the buyer. The buyer’s agent should verify the asking price with a comparative market analysis.  This determines from the buyer’s perspective whether the asking price is appropriate in view of recently sold comparable value pic.jpg

In today’s market, multiple offers are routine in the home buying process.  It is just part of the landscape so it should not be a surprise if you are in competition once you finally find your desired home.  One thing to know is that you have no control or knowledge of what others offer (and, no, your agent won’t either).  What you can know and control is to know whether you are paying at market value and that you control the amount you are willing to offer.

Note that homes are selling overall for about 98% of list price in Chicago. Therefore, lowball offers in this market usually won’t be successful unless the home is grossly priced over market value.  The owner may also have a strong motivation to sell that overrides getting the best price.

Also, buyers should know that sellers are not obligated to accept or counter your offer. Often, buyers will submit a lower offer which they feel will “give them room to negotiate”.  However, in an environment where multiple offers are common, you may never get the chance to negotiate if there are other stronger offers on the table.  The seller may also refuse to counter a low ball offer.

Contract Terms

Secondly, both buyer and seller should be familiar with the key elements of the specific purchase contract.  Buyers should also know that many foreclosures have their own specific contract that override the terms of the standard board contract.  Make sure that you are familiar with the specific contract used by your agent.

After the contract is signed by buyer and seller, the buyer will generally deposit earnest money with the seller’s listing brokerage (or other designated escrowee).  The earnest money deposit is generally 1-2% of the contracted sales price and acts as a good faith deposit that the buyer will complete the transaction.  Earnest money is considered part of the down payment towards the purchase of the home.  It is protected by the common contingencies listed below if the purchase fails to close.  If there is no breech of any contingency or other contractual terms, the buyer can lose any earnest money forwarded.  Therefore, the buyer needs to be aware of deadlines and other terms in the contract.

Common Contingencies

The most common contingencies in a real estate purchase offer are as follows :

  • Mortgage Financing contingency – the buyer’s offer is contingent on them receiving lender approval of loan.  This protects the buyer in case there is a problem with obtaining financing.  It also sets the timeline for receiving a mortgage commitment from your lender. It is a not a good idea to make your offer more appealing by setting an unrealistic timeline for mortgage approval.  If the mortgage commitment or closing dates are missed, the seller has the right to terminate the sales agreement.
  • Inspection contingency – If the physical condition of the property is not acceptable to buyer, this allows an “out” for the buyer.   The buyer may also determine “repairs” wanted from thecouple signing contract_resized.png seller before they will agree to the purchase.  Buyer and seller will negotiate on requested repairs and come to an agreement as to which ones wll be done.  The offer is then contingent on those items being completed. In the Chicago area, the contracted inspection contingency period is generally 5 business days.
  • Attorney Review contingency – the standard period for attorney review is in place for the protection of both buyer and seller. The attorney will review the signed contract and draft any additional terms to be negotiated or changed.  In the Chicago area, the contracted attorney review contingency period is generally 5 business days.
  • Condo ContingenciesCondo purchases have elements that are unique to that sector of the market. Use this contingency to review the bylaws, amenities, and confirm the monthly association fee or any planned special assessments.

The above contingencies are also important because they protect your loss of earnest money.  Bottom line, this is a legal as well as a  financial transaction.  There is a lot of information in the purchase contract.  You should familiarize yourself with the terms of your offer.  Also, have attorney representation for any questions you have or issues that occur. An experienced agent also matters.

Additional Contingencies

The last issue in negotiating your home purchase offer is determining what additional points are important for you. These can include seller’s contribution toward buyer’s closing costs, timing of close, etc.  If you need to sell your current home before buying the new home, you can also set contingency that allows you time to close on your existing home before closing on new home. This protects you from being stuck paying for two mortgages or homeless after selling your existing home.  The seller can also negotiate to stay in home for a period after closing.  As you can see, price is totally not the only term to be negotiated in your home purchase.


Please don’t sabotage your offer with “nickel and dime” haggling. The focus in the purchase offer process for the buyer is getting the home they want at a fair and acceptable price — not the “win”.  Don’t waste time speculating on the seller’s intentions and mindset.  It’s not about the “win”,  it’s about getting the home that you want at a fair price and with the terms you need to complete the transaction. Does it make sense to walk away from the home that really fits your criteria because the seller won’t leave their washer and dryer? Negotiation involves give and take.

Buying and selling a home is a big deal.  It should be a great experience for you too (even if sometimes frustrating).  Know upfront the home buying process and that may remove some of the uncertainty.

If you are looking to buy or sell in the Chicago market, please give me a call or email.  I look forward to earning your business.

Millie C. Lumpkin, Broker