Have the information and background to engage knowledgeably in what can be a very, intense, fast process.
Negotiation strategy is different from negotiation style. From pit bull to diplomat, each of us has a personal style. But the strategy for negotiating the purchase of a home is based on facts: the real estate market at the moment of your attempt to purchase, the seller’s requirements and the property itself (condition, amenities and comparative value in relation to other sold or listed properties).
The best real estate agents have tremendous expertise when it comes to market value in particular areas. In many instances, the most experienced agents have seen just about all the homes that have come on the market over the years. They also work with other agents and speak the same language. For buyers, that is the primary reason to work with an agent: They have the information and background to engage knowledgably in what can be a very intense, fast process.
Now, does that mean you can’t undertake your own negotiation? Absolutely not. In fact, many buyers do. It means:
The local market’s condition is the single-most important factor in negotiation strategy. And just like the weather, the landscape is a crazy quilt of micro-climates. Markets vary from place to place and neighborhood to neighborhood. The first thing you need to know is what kind of market you are in: a buyer’s market; a seller’s market, a balanced market or a market where red-hot bidding wars ensue.
You have more leverage in a buyers’ market than any other market type because there are more homes for sale than buyers to make offers. For sellers, especially those who have to move for whatever reason, this is the most nerve-wracking market. Properties take longer to sell, so sellers are less likely to allow potential buyers to slip their grasp. They may hate your demands, but they need to sell, so you can assume control of the negotiation.
Buyer’s tip: You’re most likely to win concessions and personal property in a buyers’ market.
Pit bulls beware. In a sellers’ market, buyers don’t have much clout, and style matters. If the seller has a desirable home and doesn’t like your offer, he won’t invest time in negotiating with you. In a sellers’ market, a good strategy is to make a straightforward, “clean” offer.
Buyers cannot procrastinate once they’ve found a home they want. Any agent worth his commission will urge you to make a quick decision, perhaps drawing up an offer the same day you tour the property.
Buyer’s tip:Forget the wrangling and go for the house. You’ll feel lucky to get it.
A balanced market feels less like a pressure cooker because there is a more equal supply of homes and buyers. Because neither side is feeling market urgency, personal priorities reign. Expect the back-and-forth counteroffer phase to take longer than it does in either a buyers’ or sellers’ market. After several rounds of paperwork, buyer and seller might agree to do a 50-50 split of their differences on price, terms and personal property.
Buyer’s tip: Both buyer and seller are likely to feel good about the transaction. They will each gain and give up something in the spirit of compromise during the negotiation.
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