Home Buying 101: Don't Be Afraid to Underbid

Real Estate Lesson #2: The asking price is just a starting point for negotiation. If you want a home that is priced out of your range, make an offer anyway, for an amount that you can afford.

A good agent should be able to feel out the situation and determine how low you can go and what sort of offer the seller will consider. If you are buying on your own, look and listen for specifc language. If you are dealing with a "motivated seller," this means they are eager to sell will consider a lower offer.

New home builders and condo developers will be hesitant to lower the price on any one unit by too much. With several units to sell, your "sale price" becomes public record, and can affect the selling price of their other units. In this case, you will need to be creative. Other than lower the price, what else can the seller do for you?

The end result of my search? I made an offer on that first property I liked, and another, with no luck. The third time was a charm. I found a sunny, spacious, newly renovated condo I didn't quite think I could afford. Mark encouraged me to pursue it anyway.

We made an for $10,000 below the asking price and request an additional $10,000 rebate towards closing costs and two years of condo fees paid by the builder. The builder only agreed to pay 18 months of condo fees, but accepted the remaining terms of the offer! And, I got the rebate from Mark along with the first-time homebuyer tax credit from the DC Government. The net price of my condo was more than $29,000 below the asking price.

Homebuying 101: Get Cash Back From Your Agent

I bought my first home in December 2006. It is a two-bedroom, two-bathroom condo in the Mount Pleasant neighborhood of DC. It has 15 windows, a new kitchen and I love it. The process of buying real estate opened my eyes to a whole new word of negotiating and bargain hunting.

Real Estate Lesson #1: Make your agent work to earn your business. Some agents will actually pay you for the privilege of managing your real estate transaction, particularly in competitive markets like Washington, DC. Mine did.

After months of research, browsing listings, visiting open houses and crunching numbers, I decided it was time to take the leap towards homeownership. Around the same time, I told my client Mark, the manager of a small local real estate agency, that I was condo shopping. Mark called often to check in on my search, sent me e-mails with properties that met my specified criteria, and encouraged me to underbid on properties that were out of my price range.

I was drawn to Mark's confidence that we could find a "good deal," but had also been in contact with another agent at one of the more well known agencies in town. I had just visited a property I really liked and was considering asking Mark to help me write the offer. After describing the property to him, Mark said, "If you let me write this contract, I'll give you $4,000 back out of my commission." Done.

Don't settle for less than complete confidence you are getting the most effort and best deal possible from your agent.