Gone are the days of real estate transactions that naturally tip to the side of the buyer or seller. As a result, the best negotiations are ones that end in a win/win where all parties feel like they received a fair deal. With that in mind, here are 5 strategies for negotiating to “yes”.
1. Begin with a fair asking price and a fair offer. Overreaching on either side simply won’t get the job done. If you overprice you likely won’t receive any offers. If your offer is too low, you risk insulting the seller and stopping negotiations before they even start.
2. Put yourself in the other side’s shoes. Keep in mind that you both have the same goal. The seller wants to sell his house, and the buyer wants to purchase it. Try to determine the priorities for the other side and what will sweeten the deal for them. Do they need to close around a certain date? Does the buyer need help with closing costs? Work towards a deal that makes you both happy. You may have personal contact with your seller or buyer at a later date either during the negotiations or after, so negotiate as if the other side is your friend rather than your foe.
3. Be prepared to give up something you want. Neither party will have it all. What are you willing to let go of? Negotiate with your priorities in mind and don’t sweat giving up the small stuff.
4. Know what and when to negotiate. Price and terms of the contract come first. Negotiating repairs usually comes after all the inspections have been completed. That said, if the buyer knows there’s an issue that must be resolved to purchase the home, write that into the contract. If the seller wants to take something with them, like that heirloom chandelier, specify that in writing as well.
5. Don’t become emotional in negotiating. Remember, winner takes all is not the goal. Nor is accepting a deal that won’t work for you out of fear or the excitement of the moment. Know your limits and stick to them. There will be other buyers. There will be other homes. As Kenny Rogers sang, “Know when to hold ’em. Know when to fold ’em.”
In the last blog I discussed the spring market from a seller’s perspective. This week, let me reach out to you, dear buyer. This spring the market is HOT! On top of that, we continue to have a very low inventory in the Nashville area. This means you are not the only buyer considering that house you love. As I tell my buyers, “If you love it, someone else will too!”
So, here are a few things that buyers need to hear…
1. Be aggressive when looking for your home. If a house hits the market that you like, make plans to see it immediately. This may mean getting off work early or going during lunch. My clients will receive a daily email with every new listing that matches their criteria. I’ve seen homes sell within hours of hitting the market, so be aggressive and try to be the first in. Being aggressive also means you have to position yourself to purchase by having your price range and lender pre-qualification letter before you begin your home search.
2. Be aggressive with your offer. There’s a common saying in a hot market, “If you sleep on it, you lose it.” I know it’s hard to make a quick decision on this large of a purchase, but if it fits your finances and you love the house, DON’T WAIT! I prepare my buyers by telling them that they may find their new home the first time we go out together. The house you love may not be there tomorrow. When you write your offer, keep in mind that you may be competing against other buyers, so make your first offer count. It doesn’t have to be your best offer, but it does need to be strong enough to get the attention of the sellers. They should want to work with you.
3. Be prepared for an emotional roller coaster. You may write a good offer, only to discover four other buyers have too. The seller counters all the offers, asking for your “highest and best.” Don’t let your emotions lead you to write an offer that is out of your financial comfort zone or is not well supported by comps. The house of your dreams will become a nightmare if it straps you financially or is a bad investment.
4. See failure as a course correction. You may not get the house you love on your first try. In fact, sometimes it takes buyers losing a house or two to really understand this crazy market. Remember, it’s just one house and there will be others. You will eventually find another one you love just as much. In the meantime, consider your strategy and what you need to do differently. Was your bid too low? Did your request for closing costs condemn your offer to failure? Maybe you need to slide into a lower price range or just pick up your game a bit.
5. Home buying couples: Get it together! Occasionally I’m asked if I do marriage counseling! In a hot market, you have to compromise. You may not be able to have the huge yard with the master bedroom down and a workshop in your prime location. Here’s an idea…both of you make a list of what you want in this next home and rank them in order of priority. Then compare your lists. Circle the items that are on both lists. Finally, together, rank those in order of priority. And, please, remember that your relationship is so much more important than 4 walls and a roof!
Most importantly, work with an agent you trust to have your best interest through out this entire process!
*Credit for some of the ideas in this blog go to Trulia Pro-blog.