The residential real estate market is challenging, but buyers can often get a lower price and better terms if they are a skillful negotiators.
1) Arm Yourself. This means hiring the best real estate agent you can get to represent you in your purchase. This person should know what you want and how much you can afford. He or she should be a person with whom you can communicate, who inspires your trust, knows the area where you want to buy, is ready to do research for you and can help you plan your strategy when you make the offer. An added bonus to using an agent is that your offer will be much better received when it comes through a third party, so let your agent do the talking.
2) Don't be greedy. Here's good rule-of-thumb to follow: never make an offer lower than the lowest price you think the seller might actually accept. Any offer lower than that will only be considered an insult, and when you make an insult instead of an offer, you end up having to overcompensate in your next counteroffer, because the seller is now mad at you!
3) Buying a home is an emotional buy. You are not buying stocks or bonds; you're buying a home for yourself. But, in any case, it's a statement of who you are and how you want to live. So, when you find yourself getting excited or angry, get advice from your buyer's agent and from friends. Negotiations can fail before they begin when a buyers lose their "cool".
4) Get the facts straight, and compare apples with apples. Let's say you are interested in a certain property. Your agent has access to the sales and tax records for all the properties "for sale" and "sold" in the area where the property is located. Pay the most attention to the "sold" prices of similar properties that have changed hands in the past six months. Drive by the houses, if you can, and get the details on the interior features of each one. Compare like properties; don't think you can get a house with a new kitchen for the same price as the one that needed renovation.
5) Concentrate on the sale rather than the sellers. Buyers are often tempted to assign all kinds of attributes to the sellers, even if they have no idea of what the people are really like. They might think the sellers are "cheap" or "unreasonable" or "stubborn", and use up all their energy second-guessing the sellers' motives, rather than focusing on how to get the price and terms they want.
6) Explain yourself. If you are asking for an unusual term, like a late settlement, make sure youexplain why. Buyers and sellers can agree on terms more easily if they understand the otherparty's objectives and needs.
7) Let them know you love it. It may sound corny, but you may want to accompany your offer with a letter telling the seller just how much you love their house and why. Like buyers, sellers get emotional, and it won't hurt to let them know that you really appreciate their home.
8) When you get an inch, don't go for a mile. Most inexperienced negotiators interpret any concession on that part of the seller as a total victory and end up losing by making unreasonable demands and "turning off" the seller. For example, earlier this year, certain buyers asked the sellers if they could put off reviewing contracts an extra day to give them a chance to sit down and write an offer. The sellers agreed and the buyers then asked if they could see the house one more time. The sellers agreed and the buyers then asked if the sellers would hold financing and include some of their expensive furnishings as part of the list price! Needless to say, these buyers did not get the house.
9) Stay in the game, and don't overreact. If you get a counteroffer from the seller that is higher than you expected, don't give up. A slight increase in price on your part and a change in terms that pleases the seller can still allow you to reach your target price range.
10) Be realistic; you never get everything you want. If the house is priced at $900,000, you won't get it for $750,000, no matter how clever you are. If the property is over-priced, it may eventually come down in price, but as long as the sellers' expectations are so high, you are not going to be able to pull them far enough in your direction.
Set your sights on the properties that are fairly priced, plan your strategy, stay calm and cool, and you have a good chance of saving money on your new purchase.
-Donna Evers, Broker and President, Evers & Co. Real Estate