How To Negotiate A Real Estate Deal
Whether you’re buying or selling, learning how to negotiate a real estate deal is an incredibly important part of the process. As a seller, you want to close the deal as quickly as possible while getting the most money that you can. As a buyer, you want to convince the seller to lower the price as much as possible.
So, how do you negotiate with a party that has opposing goals? Consider these tips to help you learn how to effectively negotiate your next real estate deal.
Don’t Make the First Offer
When it comes to negotiations, you’ll often hear the advice that you should never make the first offer. The reason for this is simple:
Making the first offer takes away your leverage and you could potentially make an offer that favors the opposing party more than you.
For example, let’s say you’re in the market for a new house. You find the perfect property, so you make an offer of $200,000 to the seller. However, by doing this, you take away your ability to negotiate the price down based on the seller’s offer. If the seller would have offered to sell you the home for $210,000, you could have counter-offered with $150,000 and ended up paying something around $175,000. However, since you already offered $200,000, you can’t go any lower than that.
Letting the opposing party make the first offer allows you to make a more informed counter-offer.
One of the most important aspects to consider when negotiating a real estate deal is financing.
As the seller, you should already know the financing terms that you would be willing to accept. This can help you save time by avoiding negotiations with buyers who don’t have access to acceptable financing.
As a buyer, securing financing in advance may be a requirement to get to the negotiation stage in the first place. Additionally, having financing can give you more leverage as the seller already knows you’ll be able to pay for the home.
Time Your Purchase/Sale
If you’re not in a hurry, you should consider timing your purchase or sale depending on the state of the real estate market.
Sometimes, the market might be in the seller’s favor while, other times, it might be in the buyer’s favor. If time is of no concern, then waiting for the perfect time to enter the market or put your home on the market can give you much more negotiating power and get a much better deal.
Try to gain information pertaining to the buyer’s or seller’s motives. This can help you make more informed and favorable offers.
For example, in some cases, a seller’s number one priority might be to sell their home as quickly as possible rather than obtain the most money possible. If someone is in a hurry to move to a new location for their job or any other reason, they might be willing to accept significantly less in order to expedite the process.
Buying or selling a home can be a difficult process to navigate. Utilizing these tips can help you successfully negotiate your next real estate deal.