Successful Negotiation Strategies for Buying Real Estate

By on March 2, 2017

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From Type A personalities to diplomatic types, each of us has a personal negotiating style, however style is not the same as strategy. Your negotiating strategy will be based on your real financial capabilities, the current real estate market, the seller’s requirements and the property itself (condition, amenities and comparative value in relation to other sold or listed properties).

For most buyers, gaining access to all the relevant data and practicing their negotiating style is difficult, which is why we have real estate agents. An experienced real estate agent can have tremendous insight into market value and seller motivations. They also work with other agents so they are practiced in the art of purchase negotiations.

This does not mean that you cannot undertake your own negotiation, many buyers do. For the best chance at a successful negotiation, you will need to research and brush up on ways to assess the situation before choosing the appropriate strategy. If you do not have an agent, be sure to review the details with a financial advocate so you feel prepared and confident about expectations and deal breakers before heading into battle with the seller.

Do Your Homework

The most important and effective element in house negotiations actually happens before you make an offer. If you come into the negotiations armed with knowledge and facts to back your offer, it may be easier for the seller to agree to a lower price than if you just simply made a low offer with no justification behind it.

Understand your Market:
Arm yourself with as much information going into the buying process as possible. The state of your local real estate market is the single-most important factor in setting a negotiation strategy. Are you in a buyer’s market, a seller’s market, a balanced market or a market where red-hot bidding wars ensue?

With the help of an agent, public records or online resources such as Trulia and Zillow, find out how long the house has been on the market and how many times the seller has lowered the asking price, compare with selling prices of similar houses in the neighborhood. Look at schools, property taxes, everything. These facts will be used to back up your offer.

Understand Your Seller’s Motivations:
There is also more to doing your homework then running the numbers. Focus on the seller’s motivations, not yours, to negotiate a lower price. You will feel you have a more powerful negotiating position when you recognize the reasons for the other side to give in.

It is your job to discover that pressure, and look for ways to exploit it in order to achieve a better result for yourself. If you go to an Open House, ask probing questions about the seller – they will likely tell you everything you need to know – all you have to do is listen. This personal information will help you set the tone for a successful strategy.

Make an Offer – Aim High with Confidence

You found a house and done extensive market research. Now it is time to come up with the price you are willing to pay. Aim high and expect the best outcome. Successful negotiators are optimists. The optimism of both parties allowed for room to negotiate a mutually positive outcome.

A strategy for achieving higher results is opening with an extreme position. Sellers are probably already asking for more than they expect to receive so buyers should offer less than they are prepared to pay. However, you should not give away how much you can and are willing to pay for the home. Be sure to put on your “poker face”, if the seller senses you can afford more than you are offering, he or she may be less willing to give in on price.

Don’t be Afraid to Ask for Concessions

When you present your opening offer, do not include extras, like appliances or repairs unless absolutely necessary. If your offer is priced appropriately and accepted, you will probably have the money to buy the items or services for your specific tastes. If you continue to negotiate, ask for concession each time you increase your bid. The seller may say no to your offer but yes to your requests.

Successful negotiators are assertive about satisfying their own interests while being respectful of others, and they know that everything is negotiable. Where the seller might be motivated to move quickly because they are carrying two mortgages or relocating to a new town, time is money. You may be able to use the closing costs and closing date in your negotiations to get the price or conditions you want.

If you are asked to give something away, be sure to get something in return — “I will agree to x if you do y.” When you give something away without requiring the seller to reciprocate, they may feel entitled and ask for even more concessions. Make them earn your concession.

Be Flexible but Be Prepared to Walk Away

Confidence is key in negotiating. You want to be flexible, but if you depend too much on the positive outcome of a negotiation, you lose your ability to say NO. That desperation will damage your power to negotiate, you may even be inclined to give into the seller’s demands or pay too much. Always be willing to walk away from a deal that is not in your best interests.

Don’t Take it Personally

Successful negotiators focus on solving the problem, which is: How can we, the buyer and seller, come to an agreed price and terms that respects the needs of both parties? Trying to play towards a tough or rude seller’s behavior may distract from or sabotage negotiations. In most cases, these behaviors can be chalked up to having a bad day and are not pertinent to making a deal. Ignore them and move on.

Negotiating in a Buyer’s Market

You have more leverage in a buyers’ market because there are more homes for sale than buyers to make offers. Sellers are more likely to accept special demands because they need to sell quickly and can’t afford to lose a sale. Feel free to negotiates for those closing fees, appliances, roof repairs or upgrades without the risk of scaring off your seller.

Negotiating in a HOT Seller’s Market

In a sellers’ market, buyers don’t have much leverage so a personable attitude and straightforward offers are going to appeal to most sellers. You also will not be able to procrastinate once you have found a home since competition will be high. Know your limits and get pre-approved financing so you can negotiate standard contingencies and make quick agreements.

Strengthen Your Ability to Negotiate with the Help of an Agent

If you are competing with other buyers for a property, your real estate agent’s experience and market knowledge can be critical to your success in making an offer that is optimal for your pocketbook. Go with a real estate professional you can trust and know will go the extra mile for you.

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