Everyone Wants a Good Deal When Buying a Home—But What Does That Really Mean?

Everyone wants a good deal when buying a home.

But here is the interesting part: a “good deal” doesn’t mean the same thing to every buyer.

For one buyer, it may mean getting the house for $50,000 below the asking price. For another, saving $500 a month on the mortgage payment could be far more valuable. Someone else may need to preserve cash for improvements after closing.

That is why I tell buyers to look beyond one question:

“How much can we get the seller to come down?”

The better question may be:

“How can we structure this purchase so it becomes the best deal for you?”

The Market Has Changed

For much of the past 15 years, the real estate pendulum has leaned heavily toward sellers.

We experienced periods when Huntington Beach and Orange County homes received multiple offers almost immediately. Buyers sometimes had to offer above asking price, shorten contingency periods and compete aggressively just to get the house.

Today’s market looks different.

Higher mortgage rates have affected affordability, homes are often taking longer to sell, and buyers have become much more selective. That has created negotiating opportunities that simply weren’t available during the strongest seller’s markets.

And that changes what a good offer can look like.

A Lower Price Isn’t the Only Way to Get a Good Deal

Suppose a home is listed for $1,200,000.

The obvious strategy might be to offer $1,150,000 and try to save $50,000.

But what if the seller won’t accept that price?

There may be another approach.

Perhaps the seller will accept something closer to the asking price while providing a credit toward the buyer’s closing costs or an interest-rate buydown.

Depending on the buyer’s financial situation, that concession could potentially be more valuable than simply negotiating the price lower.

The purchase price is important—but it is only one piece of the deal.

Seller Credits Can Preserve a Buyer’s Cash

Cash is incredibly valuable when purchasing a home.

Between the down payment, closing costs, moving expenses and improvements after closing, buyers can quickly watch their available cash disappear.

That’s why negotiating a seller credit can be so powerful.

Subject to the buyer’s loan program and lender requirements, a seller credit may help cover allowable closing costs or financing expenses.

That can allow the buyer to preserve more of their own cash.

Maybe that money stays in savings as an emergency reserve. Maybe it allows the buyer to make improvements after closing. Or perhaps the overall financing strategy allows the buyer to put more money toward the purchase.

Sometimes the better deal isn’t paying less for the house.

It’s having more money left in your bank account after you buy it.

In Today’s Market, the Interest Rate Matters

Buyers naturally focus on price, but affordability is heavily influenced by the monthly payment.

And the interest rate plays a major role in determining that payment.

That is why one of the strategies I like buyers to explore with their lender is whether negotiating a seller-funded interest-rate buydown makes sense.

Instead of asking the seller for another price reduction, we might ask:

“Would the seller contribute toward reducing the buyer’s interest rate?”

That can sometimes have a much greater immediate impact on the buyer’s monthly budget.

What About a 3-2-1 Buydown?

A 3-2-1 temporary interest-rate buydown can be particularly interesting in a higher-rate environment.

Here’s a simplified example.

If the buyer’s note rate were 7%, a 3-2-1 buydown could effectively structure the buyer’s payments approximately like this:

Year 1: Payments based on a 4% rate
Year 2: Payments based on a 5% rate
Year 3: Payments based on a 6% rate
Year 4 and beyond: Payments based on the full 7% note rate

The seller can potentially fund the cost of that buydown as part of the transaction, subject to lender and loan-program requirements.

That can give a buyer three years to gradually adjust to the full payment rather than absorbing it immediately.

It is important to understand that this doesn’t change the actual note rate, and buyers generally must qualify based on the full rate rather than the temporarily reduced payment.

And while interest rates could decline during those three years, allowing the homeowner to explore refinancing, there is no guarantee that rates will fall or that refinancing will make financial sense.

That’s why this strategy should work even if refinancing never happens.

Repairs Can Be Part of the Deal Too

There is another opportunity buyers sometimes overlook.

Condition.

Today’s buyers often prefer homes that are already updated and move-in ready. That can create opportunities with homes that need some work.

Perhaps the house needs flooring, paint, HVAC work, plumbing repairs or other improvements.

Instead of simply demanding a lower purchase price, we can sometimes negotiate repairs, credits or other allowable concessions.

A property that other buyers overlook because it isn’t perfect may ultimately become the better value.

Sometimes the Best Deal Is the House Nobody Else Wants—Yet

I’ve been selling real estate for more than two decades, and one thing I’ve learned is that competition can dramatically change a buyer’s negotiating position.

The beautiful home that hits the market Friday and has five offers by Sunday probably isn’t where we have the greatest leverage.

But what about the home that has been sitting for 45 days?

What about the property that fell out of escrow?

What about the home with dated carpet and paint but great bones?

Or the seller who has already purchased another home and is motivated to close?

Those situations can create opportunities.

The best negotiation often begins before we ever write the offer.

Understanding why the seller is selling can be just as important as knowing what they’re asking.

There Are More Ways to Create a “Good Deal”

When I’m helping a buyer evaluate a property, I don’t want to look only at price. I want to look at the entire transaction.

A good deal might include:

• A lower purchase price.
• Seller-paid closing costs.
• A temporary or permanent interest-rate buydown.
• Repairs completed before closing.
• Credits for repairs the buyer will complete later, when permitted.
• Appliances or other agreed-upon items included with the home.
• A longer or shorter closing period that benefits the buyer.
• Favorable possession terms.
• Keeping more cash in reserve after closing.
• Finding a home with improvement potential that other buyers have overlooked.

And sometimes a good deal is simply buying the right house at a fair price without getting caught in a bidding war.

Don’t Win the Negotiation and Lose the House

There is another side to this conversation.

Buyers shouldn’t negotiate simply for the sake of negotiating.

If we find the right Huntington Beach home, priced appropriately, in a neighborhood you love, losing it over an arbitrary number may not ultimately feel like a good deal.

That’s where experience and strategy matter.

We need to understand the property, comparable sales, days on market, condition, competition, seller motivation and financing options before deciding how aggressively to negotiate.

A good deal isn’t about beating the seller.

It’s about putting together a transaction where the numbers make sense, the home meets your needs and you feel confident about the decision when you receive the keys.

The Question I Ask Buyers

So when someone tells me:

“Mike, I want to get a good deal.”

My next question is:

“What does a good deal mean to you?”

Is it the lowest possible price?

The lowest possible monthly payment?

Keeping more cash in the bank?

Getting the seller to help with closing costs?

Buying a home that needs a little work at a better value?

Or simply finding the right home without overpaying?

Once we know the answer, we can build the offer around your definition of a good deal.

Today’s Orange County and Huntington Beach real estate market is giving buyers negotiating opportunities we haven’t always had.

The key is knowing how to recognize them—and how to structure an offer that takes advantage of them.

If you’re considering buying a home in Huntington Beach or Orange County, let’s sit down and look at the numbers before you start writing offers. Sometimes the best deal isn’t the lowest price.

It’s the smartest combination of price, payment, cash and terms.

Mike Rains | First Team Real Estate
California DRE #01329985
Serving Huntington Beach and Orange County