Certainly, your exclusive buyer’s agent is there to advise you during negotiations. However, it is easy for buyers to get lost in the moment. Emotions frequently push out rationale thoughts, and you can stop listening to the advice your agent is providing you.
It is essential to have a negotiating strategy early in the home buying process and stick to it. We provide tips to help you get a fair deal.
Know the value
You need to know the property’s value before making an offer. Your agent should present you with relevant comparable sales, or comps. This helps you formulate a fair value, and this figure assists you in staying financially disciplined. Writing it down is also a helpful reminder.
Real-Time Market Indicators
Seasoned property buyers know that it is nearly impossible to time the market in its peaks and troughs. However, market corrections bring opportunity to your negotiations in real-time. Monitor your marketplace to base your negotiations not just on lagging indicators such as comps but also on today’s valuation. Having an expert buyer’s agent in your corner can help you dig deeper into the numbers to make the right calculations.
Back it up
Your offer price is stronger when it is based on the unit’s fair value. However, merely stating this your view is not enough. You need to back it up with the facts. Remember, no two properties or units are exactly alike. If you think the unit you are bidding on is worthless, state why you think that is the case. Perhaps the comparable sales are a bit stale, or this unit needs more work.
Understand the seller’s motivation
Your buyer’s agent can help you determine why they are selling. For instance, if the sellers are going through a divorce, they may take your lowball bid more seriously. Alternatively, the sellers may be in no rush to sell and are waiting for the right offer.
Supply and Demand
The ability to negotiate greatly depends on the supply and demand of a particular property type. A desirable property in a desirable location at a broadly affordable price point will bring more competition that may dictate the ability or lack of in negotiating.
There is a saying in business that if you want to be liked, get a dog. However, in real estate, the sellers’ warm feeling towards you are positive and can work in your favor. There is an emotional connection to the property, particularly if they have raised kids there, and it is not simply an investment. If you pass along a letter to the seller and explain how much you love the place, that will help boost your chances.
On the flip side, being brusque and rude undoubtedly hurt your negotiating position. If a competing offer is similar, you will likely lose out.
Reach common ground
Try to build some positive momentum by agreeing to the simple stuff. These are items you are willing to concede. Perhaps you are flexible regarding the closing date. Let the seller know, and you come across as reasonable, and you are in a position to ask the seller for concessions.
Understand the seller’s point of view
Try to put yourself in the seller’s position. When you do so, objectively decide if you are being unreasonable. If so, this could indicate it is time to revisit your offer.
When doing so, let the seller know that you have heard his/her position, and understand it. You may not completely agree, but at least the seller does not feel ignored.
Get it in writing
Once you reach mutually acceptable terms, it is important that both parties sign the contract as soon as the attorney has completed his/her due diligence. In New York State, oral contracts are theoretically as binding as a written one. However, it is much more difficult to prove. You will sleep better at night once the seller signs on the dotted line.
The breaking point
At some point, you need to know when to walk away. You do not want to waste your time if you have given your best and final offer and gone as far as you can reasonably go on other items.