First time home buyer. How to negotiate price?
Well it all kind of depends.   The Realtor is your pro, and you should communicate further with him.  Is this a neighborhood on the decline?  Is there a good reason to make such a low offer?  Are you totally off base when you think 85K is fair, and if so why?  Is he just working his tail off for you (a great thing)? One thing that is a key to this negotiation is financing.  What does your financing status look like?  A reasonable cash offer with no contingencies and a quick close might be less than 70K.  A person with strong financing can get a better discount then a person that is questionable. It could be that the Realtor is testing the waters to find the bottom price.  The home selling season is closed (typically the summer), and the home has been on the market for a bit.  Offering 70K might mean a counter at 82K, so you can work on an offer between 80 and 82.   To me, it sounds like this guy is working for you.  You should thank him.  It is pretty hard to find a realtor that is willing to negotiate his pay down in order to save you money.   Also he can answer the closing cost question better than us as he is more familiar with your particular market. In this case, trust the real estate agent; negotiating experience is one of the things you selected them for. Especially if they're suggesting a lower number than you expected, since they get paid on commission and so may be biased the other way.  Part of their job is to look for hints about how motivated this seller is and what price they might accept, as opposed to what price they hope to get.  And remember that the default assumption is that the two parties will meet in the middle somewhere, which means it's customary to offer 10% less to signal that you could probably be talked into it if they drop the price about 5%. This is like bridge-hand bidding: it's a semi-formalized system of hints about levels of interest, except with fewer conventions and less rationality. As far as the seller paying the closing costs: that's really part of the same negotiation, and doing it that way makes the discussion more complicated for the seller since they need to figure out how much more to charge you to cover this cost. If they offer, great, factor that into what you are willing to pay... but I wouldn't assume it or ask for it. Edit: Yes, unless you have engaged a Buyer's Agent (which I recommend for first-time buyers and maybe all huyers), their fiduciary duty is to the seller. But part of that duty is to make the sale happen. If the price goes too high and you walk away, neither the agent nor the seller make money. A bad agent can be as bad as a bad car salesman, sure. But if you don't like and mostly trust your agent, you are working with the wrong agent. That doesn't mean you give them every bit of information the seller might want, but it does mean you probably want to listen to their input and understand their rationalle before deciding what your own strategy will be. As far as the specific price - it depends so much on the area and the house and other things.  70k could be a perfectly reasonable offer, or it could be an insulting lowball.  If they just lowered it from 95 to 85 for example, 70 is pretty low to start off.  But who knows. To answer the closing costs side of things, though, the reason those are sometimes paid by seller (rather than just dropping the sales price some) is that it makes it easier for the buyer if the buyer doesn't have much cash on hand.  From the seller's point of view it's all the same money - giving you a discount on the sale price vs. covering closing costs - except for the small difference of the realtor's commission (which would be slightly lower in the lower-sales-price example, but usually that's not a significant factor in total cost).  IE: vs How much having the 3k less on hand (and instead in your mortgage) is worth to you as a buyer is, of course, up to you.  If you have plenty of cash on hand for the down payment and closing costs, then paying closing costs yourself is probably in your best interest as the seller typically assumes buyers value reduced/zero closing costs at more than 100% face value. No offer is too low. You can always offer more but you can't offer less once you have made your first offer. And there is always another great deal just around the corner. The more enthusiastic you are about buying this property the less your negotiating power will be. The pproperty has already been on the market for a long while, so the vendor may be getting desperate to sell, so their negotiating power is already lessened. Know what the market is in the the area and offer at least 10% below the market. If it is a weak market then offer at least 20% below market. (Note: the list price is usually more than the market price). So offer as low as possible and you can always offer more if you think it is still a good price. Treat it like a game and have some fun, don't stress out if you miss out, there will always be a better deal just around the corner. "Do some homework to determine what is really a fair price for the house.  Zillow helps.  County tax records help, including last sale price and mortgage, if any (yes, it's public).  Start at the low end of fair. Don't rely on the Realtor.  He gets paid only if a sale occurs, and he's already coaxing you closer to a paycheck.  He might be right with the numbers, though, so check for yourself. When you get within a thousand or two of acceptance, ""shut up"".  I don't mean that in a rude way.  A negotiating class I took taught me how effective silence can be, at the right time.  The other side knows you're close and the highest you've offered.  If they would be willing to find a way to come down to that, this is the time.  The awkward silence is surprisingly effective." "Often, if your realtor and the selling realtor know each other, your realtor will ""discover"" what price the seller really wants. (Don't worry about how this is done. There will be no evidence it occurred!) Your realtor will then drop hints that you should aim for that price to ensure the deal goes smoothly. That sounds like what your realtor is doing when he says ""If you want to play ball offer them $80k."" He won't stop you from bidding lower, but he knows where you'll end up.  Price is just one part of the transaction, however. You can offer $80K, to meet their price, but also request that the seller make recommended repairs or credit you the cost. You can request that the seller cover closing costs or transfer taxes or any other costs. In short, offering the seller X doesn't mean you will pay X. I personally try to avoid credits, because although they make your effective price lower, the actual purchase price still drives things such as your loan, and in many places, your property taxes and other taxes. I would rather reduce the price than get credits. But you do what you have to do if you want the deal. You can also request that certain appliances be included, such as a refrigerator or a washing machine and dryer. You can ask for furniture, or statues in the backyard, or anything else you liked when you saw the house. In short, you offer X for the house, but you also get a bunch of other stuff that you need or want." Whether applying for a job or buying a house, Offer a more specific price like $72,500, which tells them you thought hard about the price. $70K is too 'round' of a number. Additionally, your financial ability/condition can be a factor too. If you have 20% down, and your Realtor assures the seller that your transaction will go down without a hitch, and you'll be approved for a mortgage, they may accept your offer of $72,500 over the other guys $78K offer if [s]he has less desirable finances. Good Luck! "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." "First of all, never ask a realtor for advice. The realtor represents the SELLER. Blankip's advice above is by far the most accurate of the previous answers. The first step is to estimate the market. Look at past sales in the neighborhood over time, and from them estimate the prospects for the house at different time durations. Based on other sales, how fast do you think the house will sell at a given price? 60 days, 90 days, a year? If a house is high priced, that means the seller is prepared to wait. He is saying ""I am happy to wait a year to find somebody who will pay this."" Next, who is the owner? Young professional? Retiring couple? Landlord? Flipper? Who is it? The more you know about the owner, the better. Everybody has a time table, you need to find out what that is. Next, what is YOUR timetable? You need the house by the end of the month, or by the end of the year, or never, which is it? Objectively rate the house. Plusses and minuses. Good houses are those which everybody else hates and you love. You will get the best price there. (Assuming you need to find a house in 90 days) Based on these considerations determine the lowest price you think the owner will accept in a 30-day time frame. Make a written offer with an address and email, no phone number. If he comes back with a counter offer, ignore it. If for some reason a realtor has your number and calls you, tell them ""My written offer speaks for itself. I have nothing further to say."" It is very important not to entertain haggling or counter offers. Don't even pick up the phone. He has your WRITTEN offer. He can email or write you: I accept.  If the 30-days elapse, move onto your #2 choice and make a more aggressive offer. If that doesn't work, go to choice #3 and accept the listed price. This strategy may seem counter-intuitive because the natural tendency for people is to want to communicate. Trust me: the way to succeed in a negotiation is to NOT communicate. Make your offer and that is that. That is the pro way to do it, and will produce the best result for a short-term situtation. Long term situation If you are an investor (""flipper""), or have a lot of time to wait/spend, you can use a different strategy which involves pressuring the seller. What you do here is find a property you want in which the owner is vulnerable. That means someone who is old, bankrupt, out of work, indicted and on their way to prison or already in prison, etc. Bank owned properties fall into this category. In this case you figure out the 6-month price or however long you are willing to work on it. Then you pester the person. Become their buddy. Visit them in prison. Take the bank officer to lunch. Show up on holidays. Invite them to Thanksgiving. Start a relationship. Every two weeks you pester them. Want to sell yet? Want to sell yet? You basically harass them until they capitulate. Maybe it takes 6 months. Maybe it takes 2 years. Eventually they will give in. By this means you can get a much better deal than in strategy 1 above, but it takes a lot more time and effort and is appropriate more for an investor."
First, let me say that you have to take everything your agent says with a grain of salt. Freakonomics had a great article that discussed the math behind the motivation of the real estate agent.  It described the home seller, trying to get, say $400K. On a 6% commission, the $24K is destined to be split between seller realtor office and buyer's realtor's office. The selling agent gets $6,000 (or so) in the end. As a seller, if I settle for $380K, my realtor is only out $300, netting $5700. But $20K lower sale price, and I just lost nearly $19K after commission is paid.  The agent would have the natural goal of volume, not extracting the last dollar from the buyer. Gaining back the last $20K to the seller will cost the realtor far more than $300 in her time, keeping the house on the market and waiting for the better offer.  Sellers might use down payment as one way to estimate the probability of the financing falling through, but it's a rough estimate at best because, in the case of bank financing, the bank needs the same time to run through the paperwork for a 3% down or a 20% down. It's just as easy for the buyer to qualify or not qualify for one loan or the other. There are young couples with great incomes and no debt, who blow away the required ratios for proposed debt to income, but haven't saved up the otherwise huge 20% downpayment. Then there are those who have saved for years, even having 30% to put down, but their income is still not going to qualify them. The offer will be contingent on the financing, regardless. It will show that you are putting $XX dollars as a downpayment, and the final transaction is contingent on your bank approving you. "Maybe things are different in California. I live in Michigan and have bought several house (over the course of many years) in Ohio and Michigan, and I have never hired a lawyer. Yes, there are all sorts of contracts to sign, but these are all standard contracts. I'm sure people contracting for a $50 million office building have lawyers and haggle over contract terms, but for the typical home buyer, the realtor shoves the contract in front of  you and you sign it. Your choices are basically take it or leave it. If you don't like it, you're going to find that all the realtors in the state use pretty much the same standard contract. Very Late Update The paragraph you quote says ""these MAY include ..."". There are circumstances where you would want to hire a lawyer to review or negotiate documents related to a loan. But I don't think that's the normal case." A complete analysis of your current situation, goals, and formulating a plan to meet those goals, including discussing your risk tolerance cannot be completed during the initial meeting. The first meeting should be him trying to convince you of his skills and services, he will also be collecting the required data from you.  You could inquire a few days before the meeting what information he needs from you. The less he asks for the less though the analysis at the initial meeting. This would also be a good time to ask about fee structure. Some planners make money on the initial plan, others make money on the execution of the plan. What fee that is expected for the initial analysis can vary greatly. You should ask, but most will consider this first meeting as the cost of doing business. The way to do this is to make your best offer and let the seller and his/her agent do the negotiation between them. If you try to build in the discount in your offer, you will come across as cheap. From then on we've felt he was really pushy and rushing us to make a decision (we need to lock in a good rate, its a sellers market, it'll go fast, snooze loose, etc).  This is the first reason for walking away. I understand that all those factors might be true but my question is: How do I know we made a good offer? I'm going to be blunt, here: You don't. You work out ahead of time what you will pay (ignore the agent) and you make the offer on the basis of your own research, research you spent months undertaking. The listed price on the location is $375,000 and according to our agent similar units over the last few years had sold for that amount. So our agent suggested making an offer at market price.  According to the agent. I'm going to be blunt here, what do any of the real estate sites out there - that offer a wealth of information for free - indicate? If you don't know, then yet again you don't know if you made the right offer or not. Do some research now by yourself. I would be shocked if your offer was at the right level. Set your emotions aside - there are a gazillion houses out there. Ideally you would negotiate a car price without ever mentioning: And other factors that affect the price. You and the dealer would then negotiate a true price for the car, followed by the application of rebates, followed by negotiating for the loan if there is to be one. In practice this rarely happens. The sales rep asks point blank what rebates you qualify for (by asking get-to-know-you questions like where you work or if you served in the armed forces - you may not realize that these are do-you-qualify-for-a-rebate questions) before you've even chosen a model. They take that into account right from the beginning, along with whether they'll make a profit lending you money, or have to spend something to subsidize your zero percent loan. However unlike your veteran's status, your loan intentions are changeable. So when you get to the end you can ask if the price could be improved by paying cash. Or you could try putting the negotiated price on a credit card, and when they don't like that, ask for a further discount to stop you from using the credit card and paying cash. The cleanest way to accomplish this is to make the purchase of your new house contingent on the sale of your old one.  Your offer should include that contingency and a date by which your house needs to sell to settle the contract.   There will also likely be a clause that lets the seller cancel the contract within a period of time (like 24-48 hours) if another offer is received.  This gives you (the buyer) at least an opportunity to either sell the house or come up with financing to complete the deal. For example, suppose you make an offer to buy a house for $300,000 contingent on the sale of your house, which the seller accepts.  In the meantime, the seller gets an offer of $275,000 in cash (no contingency).  The seller has to notify you of the offer and give you some time to make good on your offer, either by selling your house or obtaining $300,000 in financing.  If you cannot, the seller can accept the cash offer. This is just a hypothetical example; the offer can have whatever clauses you agree to, but since sale contingencies benefit the buyer, the seller will generally want some compensation for that benefit, e.g. a larger offer or some other clause that benefits them. Or do I find a house to buy first, set a closing date far out and then use that time to sell my current one? Most sellers will not want to set a closing date very far out.  Contingency clauses are far more common. In short, yes it's possible, and any competent realtor should be able to handle it.  It also may mean that you have to either make a higher offer to compensate for the contingency and to dissuade the seller from entertaining other offers, or sell your home for less than you'd like to get the cash sooner.  You can weigh those costs against the cost of financing the new house until yours sells. "There is considerable truth to what your realtor said about the Jersey City NJ housing market these days. It is a ""hot"" area with lots of expensive condos being bought up by people working on Wall Street in NYC (very easy commute by train, etc) and in many cases, the offers to purchase can exceed the asking price significantly. Be that as is may, the issue with accepting a higher offer but smaller downpayment is that when the buyer's lender appraises the property, the valuation might come in lower and the buyer may have to come up with the difference, or be required to accept a higher interest rate, or be refused the loan altogether if the lender estimates that the buyer is likely to default on the loan because his credit-worthiness is inadequate to support the monthly payments. So, the sale might fall through. Suppose that the property is offered for sale at $500K, and consider two bids, one for $480K with 30% downpayment ($144K) and another for $500K with 20% downpayment ($100K).  If the property appraises for $450K, say, and the lender is not willing to lend more than 80% of that ($360K), then Buyer #1 is OK; it is only necessary to borrow  $480K - $144K = $336K, while Buyer #2 needs to come up with another $40K of downpayment to be able to get the loan, or might be asked to pay a higher interest rate since the lender will be lending more than 80% of the appraised value, etc. Of course, Buyer #2's lender might be using a different appraiser whose valuation might be higher etc, but appraisals usually are within the same ballpark.  Furthermore, good seller's agents can make good estimates of what the appraisal is likely to be, and if the asking price is larger than the agent's estimate of appraised value, then it might be to the advantage of the selling agent to recommend accepting the lower offer with higher downpayment over the  higher offer with smaller downpayment. The sale is more likely to go through, and an almost sure 6% of $480K (3% if there is a buyer's agent involved) in hand in 30 days time is worth more than a good chance of nothing at the end of 15 days when the mortgage is declined, during which the house has been off the market on the grounds that the sale is pending. If you really like a house, you need to decide what you are willing to pay for it and tailor your offer accordingly, keeping in mind what your buyer's agent is recommending as the offer amount (the higher the price, the more the agent's commission), how much money you can afford to put down as a downpayment (don't forget closing costs, including points that might be need to be paid), and what your pre-approval letter says about how much mortgage you can afford.  If you are Buyer #1, have a pre-approval letter for $360K,  and have enough savings for a downpayment of up to $150K, and if you (or your spouse!)  really, really, like the place and cannot imagine living in any other place, then you could offer $500K with 30% down (and blow the other offer out of the water). You could even offer more than $500K if you want. But, this is a personal decision.  What your realtor said is perfectly true in the sense that for Y > Z, an offer at $X with $Y down is better than an offer at $X with $Z down. It is to a certain extent true that for W > X, a seller would find an offer at $X with $Y down to be more attractive that an offer at $W with $Z$ down, but that depends on what the appraisal is likely to be, and the seller's agent's recommendations." Your Purchase and Sale agreement should have a financing contingency. If it doesn't, your money may be at risk, and the agent did you no favor. Edit - I answered when away from computer. This is a snapshot of the standard clause from the Greater Boston Real Estate Board. Each state has its own standard documents.   The normal process is to have some level of prequalification, showing a high probability of final approval, make offer, then after it's accepted, this form is part of the purchase and sale process. There is a lot of your financial information that the selling agent handles in the course of a real estate transaction, including but not limited to your pre-approval letter which states what maximum purchase price might be. Closing costs and interest rate are not details they would know unless you shared that with them, given that that is done after you go binding.  I agree with xiaomy in that, while in absolute monetary terms the higher amount should always be more attractive, the selling agent wants to ensure the transaction goes as smoothly as possible. With contracts falling through due to first-time buyers not making it through mortgage underwriting, it is in the seller's interest - and thus the seller's agent's concern - that the buyer not present such hurdles. Insofar as a higher down payment is a signal for that, then I can understand why it would be more attractive. I bought a house 6 months ago for $240,000 on an $80k salary am getting by just fine and am able to save money (and I live on Long Island, an extremely expensive area to live). I would look at finding a few more interest rate quotes; for instance, Wells Fargo is offering 4.25% right now for FHA (first time home buyers) loan (which only require 3.5% down). A lower interest rate will lower your monthly payment. Make the banks compete with one another - this little bit of leg-work will save you thousands upon thousands of dollars in the long run). Also, try to negotiate to NOT paying a point down on the mortgage - most of the time they are bull, especially in this economy (banks are desperate for new loans).  However, as others have said, do not assume or count on rent coming in to be able to afford your mortgage (unless you are married). What if your friend moves out and you cannot find another tenant?  However, I strongly recommend you talk to a financial adviser and your bank mortgage loan officer to work out the numbers - you will be surprised what you can afford when you factor in your income tax and mortgage interest write-offs. "Okay so I am going to break this answer into a couple sections: Okay so first things first. Did you get a good deal? This is challenging to answer for a number of reasons. First, a good deal is relative to the buyers goals. If you're attempting to buy an asset that provides passive income then maybe you met your goal and got a good deal. If you're attempting to buy an asset that provides long term growth, and you purchased above market (I'm speculating of course) then you may have made a bad deal. So how do you determine if you got a good deal? Does your ""Gross Rental Multiplier"" equal that or is less than that of the average GRM in your area. The lower the better.  So how do you use the GRM to determine if you're getting a good deal? Divide your purchase price by the average city (or area) GRM and that will tell you what you should be getting annually in rent.  You can also use the GRM to determine if a future purchase is over or under priced. Just replace purchase price with asking price.  Alright, so these are the tools you can use to decide if you made a bad business deal or not. There are many ways to skin a cat so to speak. These are the tools I use BEFORE I purchase a home. Many people are penny wise and pound foolish. Take your time when making large purchases. It's OKAY to say PASS.  Okay next thing is this new purchase you're looking at. The number one rule when working a franchise is you don't open a second store until you have a perfect working model to go off of. If you've never had to file a tax return for your current rental. Then you need to wait. If you've never read your local and state rental laws. Then you need to WAIT. If you've never had to leave an event early, wake up in the middle of the night, or get a text while you're on a date from one of your tenants. THEN YOU NEED TO WAIT. Give it a year or two. Just learn the unknown about rental properties. Use your first as your test bed. It's WAY more cheaper then if you make a bad mistake and roll it over multiple properties.  Finally I will leave you with this. No one on this site, myself included, knows everything there is to know about real estate. Anyone that claims they do, send their ass packing. This is a complex COMPLEX business. There is always something to learn and if you don't have the passion to continue learning then hand it off to someone who does. There is tax law, rental law, city repair law, contract law and this doesn't even include the stuff that makes you money, like knowing how to leverage low or no money down loans.  Please take some time and go out and learn.  Good luck! -AR" As I've crunched numbers towards what my family could afford for a down payment (in an area with similar housing costs - don't you hate that high cost of living?), I've come up with the following numbers: We may be missing some area of expenses, but in general I think we are being fairly conservative.  You should consider making a similar list to determine your comfort level. Spend some time with an interest calculator to know the serious pain of each dollar you are paying interest on to a lender. Also know that the bigger your down payment, the more likely the seller is to accept your offer.  It shows you are serious. There's an excellent new service called SelfScore that offers US credit cards to international students. They work with students without a credit history and even without an SSN by using other qualifying factors such as major, financial resources in their home country, and employability upon graduation. Worth clarifying: it's neither a secured credit card nor a prepaid card. It's a proper US credit card with no annual fees and a relatively low APR designed to help students build US credit. The spending limit is relatively small but that probably doesn't matter for just building a credit history. You seem to have a grasp of the basic principles involved, but your estimation of the risk you are taking seems a bit low. Your non-investment reserves are unlikely to cover your expenses for more than a month, so the chance that you would need to sell investments to cover additional expenses is high. You mention that I am flexible with the 'cash on hand' amount. For instance, for about three months I put a very tight spending/investing freeze on my life because I knew I'd be leaving jobs and moving (I already had the other job lined up). Those savings presumably went toward moving expenses, as your usual savings were insufficient. In the event that you are laid off suddenly, you might find yourself in the same position again, with added unplanned expenses like fees for breaking a lease. Your current plan involves selling investments to cover the gap. Based on your age you have probably only invested in a predominantly positive market, so the chance that you might need to sell investments for cash seems like a reasonable trade-off for the added potential gains. Your perception might change if the markets go south and you are forced to sell into a down market, possibly at a significant loss. You also don't indicate if your investments are currently sufficient to cover an extended period of unemployment. You are taking on a lot of risk under your current plan. Essentially you are trading possible investment gains for flexibility and time. By making small changes like saving at least enough to move as you did previously, you can give yourself time to react to job loss or other unexpected financial need. Rather than give the traditional emergency funds advice, I suggest you look at the broader picture. The total amount of savings/risk is up to you, but you should consider your current savings as insufficient to rely on as a safety net.