Negotiating a real estate deal is usually a daunting task for both seller and buyer. While both hope for a favorable outcome, one or both may end up sacrificing some of the things they hoped for to reach a satisfactory understanding that they can both live with. Not everyone is born with a knack for negotiating, but it is an art form that can be learned. Here are several negotiating tips to help you get the best real estate bargains.
Watch the Market Closely
Whether you’re a buyer or a seller, you should watch the market closely for going trends and conditions that could be favorable to your situation. Knowing what’s popular at the time, in addition to the supply and demand in the area you’re buying or selling, are great negotiating tools.
Having said this, it’s important to note here that even if the market isn’t favorable at the time you’re selling, you could still have the upper hand in negotiations. For instance, if you are selling a nice house in a popular neighborhood where few houses are up for sale, you have leeway to negotiate a higher asking price because the supply of properties for sale in the area does not meet demand.
Know Who Holds All the Cards When
As the real estate deal progresses, the person with the most negotiating power changes. For example, at the beginning of negotiations, the buyer holds all the cards. As the deal moves forward, however, the buyer loses some of the power, until ultimately, the seller has all the power because he chooses the buyer with the offer and terms that best suit his needs.
Get the Best Deals
In a real estate deal, both the buyer and seller look for ways to save the most money. For the buyer, negotiating a good deal means getting the lowest transaction costs possible through concessions offered by the seller. For the seller, a good deal means selling the property without having to give any concessions at all.
The Financial Side of Things
Secure financing is important to both the buyer and the seller. Without pre-approved financing in place, a buyer may not qualify for financing. For the seller, it may be hard to close a deal if the buyer isn’t pre-approved. Having secured financing in place ensures both parties can proceed with the transaction.
Know the Going Interest Rates
Low interest rates are beneficial to both buyers and sellers. Buyers are looking for the lowest interest rates possible, as well as the lowest down payment, too. For a seller, lower interest rates encourage buyers, which increases demand for properties. The higher the demand for a property, the more negotiating power a seller has.
Don’t Underestimate the Other Party
While expertise and experience surely give a leg up in any transaction, it’s important to never underestimate the other party. Even with the most financial backing and best representation, an underdog could come along and negotiate a better deal no one ever saw coming.
How to Act When Negotiating
When negotiating a real estate bargain, keep the following behavioral aspects in mind.
Negotiate face-to-face – Meeting face-to-face and speaking directly with the other party allows you to react appropriately and build a rapport with them.
Be assertive – Let the other party know it won’t be easy to con you by asking knowledgeable questions and stating informed facts about market trends.
Be polite – Mind your manners and speak politely when negotiating. Be prepared to walk away if the deal doesn’t suit you or you feel pressured, as it’s your right to do so.
Be flexible – You may go into a deal with a certain plan but be prepared to alter that plan to seal the deal. It would be a shame to miss an opportunity because you’re unwilling to budge a little bit on the financial side of things.