With most purchases we make in our daily lives, negotiation is usually not part of the transaction. We don’t try to haggle with the barista at the corner coffee shop over the price of our grande white mocha, no whip, with non-fat milk. Because of this, when we go to purchase big ticket items like cars and homes, we are often times reluctant to negotiate because of our natural desire to avoid conflict. However, when purchasing a home, negotiating is, most of the time anyway, the order of the day.
But that can depend on the market. For example, if in a community you are considering, a builder has several homes completed with no buyers for them, you may be able to negotiate with them for something. (Very common these days!)
It may end up being tens of thousands of dollars, it may be a couple hundred dollars, or it may be a free appliance upgrades. It just depends. But as the saying goes, “you never know, unless you ask!” You just don’t want to end up paying full price when you could have saved thousands or more just by asking.
It’s Not Just About the Price
Better prices aren’t the only thing up for grabs. When we hear the word “negotiation” the first thing we think of is price. But real estate transactions are so complex that there are many things that can be negotiated other than just the price. You can negotiate things such as when the closing will take place, who will pay for any repairs needed after the home inspection, who will pay the transaction closing costs or attorney’s fees, and who gets the patio furniture. The most important thing for you to remember is that almost everything is negotiable.
Top Four Tips for Negotiating
While no two real estate negotiations are exactly the same, you will find yourself in a position for success nearly every time if you keep these four simple negotiating tips in mind.
1) Keep your emotions in check.
The main thing to remember in any negotiation is to remain calm. It can help if you have a real estate agent representing you to act as a buffer between you and the seller or the seller’s agent, so long as the lines of communication are clear and open on both ends. Keep in mind that this transaction is probably just as stressful for the seller as it is for you. I recently sold a personal home of mine, and even though I’m a seasoned real estate broker, I let another broker I trust handle my sale because its just too tough to be objective when your own emotions are involved. You do not want to come out of this transaction thinking you paid too much, and the seller does not want to feel like they “gave the house away.” This segues into my next tip…
2) Do your research before submitting an offer.
If you are working with an agent, ask them for a list of homes comparable in size, style, age, and location to the one you are considering (this is called a CMA or Comparative Market Analysis) and compare the sales prices of those homes to the price of the home you are considering. If you are not working with an agent and do not have access to the Multiple Listing Service, the local property appraiser’s website usually will have data such as sales prices online. Another resource for this task is the website Zillow.com which I mentioned earlier. Keep in mind that these websites sometimes take anywhere from 6 weeks to six months longer to update than the Multiple Listing Service, and therefore may not have the most current information.
3) Set your limits before you submit an offer and be realistic.
If all you can afford to pay or are willing to pay is $300,000, you are not doing anyone any favors by looking at $400,000 homes and offering $100,000 less and hoping someone will bite. By the same token if you want or need a four bedroom home but get talked into or decide to settle on a three bedroom home, you may be unhappy down the road when you realize you really did need that extra room. Have a firm understanding beforehand of what your wants, needs, and limitations are and stick to them.
4) Be the path of least resistance.
If roles were reversed and you were selling a home and were placed in the following two scenarios, which buyer would you like to have most?
Buyer “A” has been pre-qualified by a lender, has asked for no contingencies other than the right to inspect the property and have repairs made, and wants to close within 30 days.
A lender has also pre-qualified buyer “B,” but they want to make the contract contingent upon their current home selling within 45 days. Both buyer “A” and buyer “B” are offering the same amount of money.
Most likely you would choose to accept the contract from buyer “A” and reject or at least counter buyer “B” with terms more advantageous to your position. It looks like Buyer “A” is financially able to purchase your home and they don’t want to wait. Buyer “A” wins over buyer “B” every time.
The lesson here is that when you are searching for a property in a fast moving market, be buyer “A” and give the seller every reason to choose you and your offer over anyone else’s. Be the seller’s path of least resistance.
Photo credit: oooh.oooh on flickr
{ 1 trackback }
{ 0 comments… add one now }