Learn How to Master Real Estate Negotiations from the Pros
Become a master real estate negotiator with proven tips & tricks from real estate professionals that know what it takes to get a win-win contract.
Negotiating is a bit of an art form. Successful negotiations require finesse, knowledge and understanding from both parties involved. It's a very uncertain process which can lead to an array of outcomes.
Never has this been more true 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's understandable. However, negotiating inherently needs compromise to work. It's 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're submitting an offer remember that there's another person on the other end and both parties will need to give and take no matter what the current market looks like. As Jim Fite, President/CEO of the CENTURY 21 Judge Fite Company, explains, "because it is a buyer's market, the buyer wants more from sellers than in the past". But this isn't a winning strategy because the two parties will very likely "reach an impasse and the transaction terminates."
Use an Agent
Experience can make a huge difference during the negotiation process, and it's 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'll experience during your lifetime" says Maxwell Carr, Realtor at First Team Real Estate. "Use a professional."
Know What and When to Negotiate
The old saying goes 'everything is negotiable'. However, going after everything isn't advisable. A better strategy is to focus on what's 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 always add an amendment to the contract for things like the purchase of furniture, but Jennifer A. Chiongbian, SVP/ Licensed Associate Broker of Rutenberg Realty, warns "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
Don't 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," says Monique Bryher, broker associate/Realtor at Pinnacle Estate Properties.
Even if you're in a 'buyer's market' low-balling a seller isn't a good idea. They likely know the real market value of their home and it's very unlikely they're going to accept an offer that isn't within a reasonable range. Avoid insulting the seller and killing your deal by doing your homework first. Become familiar with current market values in the area and study recent comps to determine fair market value to use as the basis for your offer.
Persuade with Facts
Building on the point above, if you have facts to back up your offer it's 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." says author and real estate attorney Adam Leitman Bailey. "Persuade with facts."
If you do you'll be in a much stronger negotiating position as it will be hard for the seller to dismiss your reasoning.
Nix the Emotions
"Looking at the transaction as a personal transaction rather than a business transaction," is a big mistake says Craig Delsack, Esq. of the Law Offices of Craig Delsack, LLC. "They [buyers] get too emotional (e.g., fall in love with a home) and don't let their common sense and business sense control their decisions."
Having an agent is the best way to ensure that emotions don't 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 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's 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 home on the market, consider whether the seller is still in the home, if it's rented out or vacant, look at all the information you can including how many days the house has been on the market. All these things will give you a clue about the seller's situation and goals.