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First time home buyer. How to negotiate price?
Advice from a long-time flipper You negotiate price based on four factors and none of these are set in stone: How much you love the house.  Is this house a 100 out of 100 for you or a 85 or a 75.  How much have you compromised. What is the likelihood that you will find a house that will make you just as happy or at least close.  You might have a house that is a 95 out of 100 but there are five other houses that you rated between 93-95.   What is your timeframe.  Know that playing hardball takes longer and can knock you out of the game sometimes and takes a little while to find a new game. What is the relative housing market.  Zillow and other such sites are crap.  Yes the give you a generalized feel for a community but their estimates are off sometimes by 30-40%.  Other factors like street/noise/updates to house/ and so on are huge factors.  You will have to really navigate the area and look for very comparable houses that have recently sold.  Then use average housing movements to extrapolate your future houses cost. As a buyer you have two jobs.  Buy the house you want and manage your agent.  Your agent wants you to buy a house as soon as possible and to increase their reputation.  Those are their only two factors of working.   By you offering closer to the asking price they are able to get their sales as quick as possible.  Also other agents will love working with them.  In fact your agent is selling you on the home and the price.  Agents hardly worry about you paying too much - as most buyers oversell the deal they get on their home.  Admitting that you paid too much for your house is more of an admission of ignorance of yourself, compared to agent incompetency. If you decide to low-ball the owner, your agent spends more time with you and possibly reduces their reputation with the selling agent.  So it is common for agents to tell you that you should not offer a low price as you will insult the owner. My advice.  Unless the home is truly one of a kind for the market offering anything within 20% of the asking price is DEFINITELY within range.  I have offered 40% less.  If a house is asking too much and has been on the market for 8 months there is no way I am going in with an offer of even 15% lower.  That leaves you no room.   What you do? First think about how much you think this house could sell for in the next 3 months.  In your example let's say 80K based on conservative comps.  Then take the most you would actually pay for it.  Let's say 75K.  70K is about as high of an opening offer I would go.   Do NOT tell your agent your true breaking points.  If you tell your agent that you would go to 75K on the house.  Then that is what their negotiations will start at.  Remember they want the sale to happen as soon as possible.  Very likely the other agent - especially if they know each other - will ask if how flexible you are going to be.  Then next thing you know your agent calls you back and says would you be willing to go 77K or the owner is firm at 80K. Do not give up your position.  You should never forecast to your agent what your next bid or offer would be for the house.  Never get into scenarios or future counters.   So you offer 70K.  If your agent asks you how firm that is?  "Very firm".  If your agent doesn't want to take the offer to them, "Thank you for being my agent, but I am going to be working with someone that represents what I want."   If the owner says "You are done too me cheapskate."  Well that's how it goes.  If the owner stays firm at asking or lowers - then you can come up if you feel comfortable doing so.  But understand what your goal is.  Is it to get a house or to get a good deal on a house?  Mine was always to get a good deal on a house.  So I might offer 72K next.  If they didn't budge, I am out.  If they moved down I went from there.   Easy Summary The fact is if they aren't willing to negotiate with you enough it always ends the same.  You give them your take-it-or-leave-it offer.  You tell your agent that if he/she comes back with one penny over it comes from their commission (god I have said this 100 times in my life and it is the best negotiation tactic you have with your agent).  The owner says yes or no and it is over.