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If you’ve grown up in the United States, you’ve grown up with a problem that may hinder you when it’s time to buy a home—you’re used to people putting a price tag on the things they’re trying to sell. Think about that for a moment. When you go into a retail store, it doesn’t say, “$3.99 or best offer.” It says $3.99 and if you want it, you need to pay $3.99.  Thus, shopping consists of comparing competitors’ offers.

The home buying process is a lot more like shopping at a garage sale than a retail store. Sure, there are prices on all of the items for sale, but you can often negotiate for a better offer. In fact, you are often expected to negotiate. So, how can you take advantage of this reality? By educating yourself on the real estate market in your area, and by fine-tuning your negotiating skills, you could end up saving yourself thousands (or even tens of thousands) of dollars when purchasing a home.

Step 1: Know the market
When your friends, family, and realtor advise you to “know the market” before buying a home, they generally mean that you should be aware of what similar homes in the neighborhood you’re searching in are being sold for (not just the asking price—the sales price, too), what the demand for homes in your neighborhood is, and whether sales prices in your neighborhood are increasing, declining, or remaining the same.

Step 2: Be a smart negotiator
Rare is the seller who puts a price on his or her home and isn’t willing to negotiate.  Barring any competing offers, which are unlikely in today’s market, this means you’re going to buy at a lower price than the listing price. The average discount varies by market, but it’s often about 5% below the listing price. These days, it may be even more. How do you get there?  Negotiation.

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