Negotiating is a bit of an art form. Successful negotiations require finesse, knowledge and understanding from both parties involved. It is a very uncertain process which can lead to an array of outcomes.
Never has this been truer than in real estate contract negotiations. Below are professional suggestions and tips on how to successfully negotiate your way to a signed purchase agreement.
Keep Win-Win in Mind During Negotiations
Of course you want to get the best deal possible, that is understandable. However, negotiating inherently needs compromise to work. It is unrealistic to believe that both parties will get everything they want. A better way to approach negotiations is with the idea of win-win in mind.
When you are submitting an offer remember that there is another person on the other end and both parties will need to give and take no matter what the current market looks like.
Use a Realtor®
Experience can make a huge difference during the negotiation process, and it is one of the most valuable things that a real estate agent can offer a buyer. Many people forget that a real estate transaction is usually the largest transaction you will experience during your lifetime, using an experienced professional Realtor makes a huge difference.
The buyers get too emotional (e.g., fall in love with a home) and do not let their common sense and business sense control their decisions.
A buyer’s agent has been in this situation many times before and understands what will and will not work, how to diffuse conflicts and can help you avoid legal issues by ensuring that the contract is written up correctly. All this expertise won’t cost you a thing, so why not have an agent on your side?
Know What and When to Negotiate
The old saying goes ‘everything is negotiable’. However, going after everything is not advisable. A better strategy is to focus on what is really important to you and would affect whether or not you still want/can purchase the home. An agent can advise you on how to work these negotiation points into the contract.
There are also strategies that can be used to work out smaller negotiation points once the main purchase agreement has been finalized. You can add an Amendment to the Contract for items like the purchase of furniture, but changing terms in the middle of contract- this is a turn off for both parties of any transaction when it happens to them. If you plan on discussing a negotiation point at a later time let the seller know up front.
Understand Current Market Values Before Putting in an Offer
Do not ruin your chance of getting a home right from the start by putting in an unreasonable offer. Some buyers get overly confident and kill their own transaction. This is by either low-balling the seller or making excessive and or puffed-up estimates for repairs or repair credits. Even if you’re in a ‘buyer’s market’ low-balling a seller is not a good idea. They likely know the real market value of their home and it is very unlikely they are going to accept an offer that is not within a reasonable range. Avoid insulting the seller and killing your deal by doing your homework first. Buyers need to become familiar with current market values in the neighborhood and study recent comps to determine fair market value to use as the basis for their offer.
Persuade with Facts
Building on the point above, if you have facts to back up your offer it is much more likely to be accepted. Be prepared to explain how you determined the fair market value of the home and when trying to negotiate a lower price, demonstrate why it should be lower by showing how much it would cost to improve or repair the property. Avoid insulting the decor and the owner’s taste. If you do you will be in a much stronger negotiating position as it will be hard for the seller to dismiss your reasoning.
View the transaction as a personal transaction rather than a business transaction, is a big mistake. For example, the buyers get too emotional (e.g., fall in love with a home) and do not let their common sense and business sense control their decisions.
Having an agent is the best way to ensure that emotions do not negate the negotiations. An agent will help to keep you focused on the facts and allow you to remove yourself from the emotional negotiation process.
Understand the Seller as Best You Can
Understanding the other parties’ motivations and current circumstances gives you a serious advantage during negotiations. It will help you create an offer that gets you what you want in a way that is agreeable to the seller. The last thing you want to do is insult the seller or hit hard on a sensitive issue.
Pay careful attention to anything that the selling agent has to say about their clients. Ask why they put their house on the market; consider whether the seller is still in the house, if it is rented out or vacant, look at all the information you can, including how many days the house has been on the market. All this additional information will give you a clue about the seller’s situation and goals.
Don Thomas has over 30 years of experience in negotiating real estate Contracts for his clients. To take advantage of his expertise in negotiating, call Don Thomas 214.641.7001 or email him at firstname.lastname@example.org.
READ MORE ABOUT DON’S SERVICES: