Real Estate Negotiation: 7 Best Strageties
Real estate negotiation requires skill in giving and taking information. Here are seven strategies to help you show the seller that your buyer is the best candidate for the home.
An important part of our job as Realtors is to help our clients negotiate for the best deal on a house. Your confidence and professionalism in this area will make your service memorable to your clients. Here are some strategies to help you guide your clients through the negotiation process.
1. Constantly re-establish trust.
Establishing trust between the parties is the most important strategy in any negotiation. Buyers and sellers know that the other party has interests that are in conflict with theirs. They begin with a certain amount of wariness of each other. It is valuable to establish rapport quickly. Show them that you and your clients will be reasonable to work with. Here are some ways for your clients to establish common ground:
Communicate that they have a common hobby, the same type of job, moved here from the same area, went to the same college, have similar children's needs, or other relatedness.
Present evidence that your clients are qualified to buy the property.
If your buyer works for a well-known company, this may increase the seller's trust.
Never delay your counteroffers. Show respect for the seller's time.
Communicate that the buyer appreciates the home.
Begin the negotiation by establishing rapport. Then continue to reinforce it throughout the closing process. I have noticed that buyers are often reluctant to show that they like the house. They believe that an aura of disinterest will help their negotiation. I recall a transaction in which the buyers met the seller, and expressed how much they liked the house. During the negotiation the seller had multiple offers to choose from. Their offer was selected. The buyers' encounter with the seller, and openness about how they felt, gave them an edge. Also, they were real people to the seller, while the other offers were just paper. The seller trusted them to close the deal.
2. Don't get negative feelings involved.
While trust is the single most important factor in a negotiation, ego is the most destructive. Many times I have seen buyers include notes with their offers. They point out faults and deficiencies, and explain why the home is not worth the price. I guarantee that these buyers paid a premium. The point is, never run down the sellers' home. This will bring their feelings to the table. And negative feelings are an unnecessary hurdle to have to overcome. If you have the opportunity, compliment the sellers' house, decorating and gardens. Don't forget that their children are always above average, and their pets are practically human. During the negotiation, anchor your offer price to market data.
3. Play on the Same Team.
It is important that you stay on the same team as your clients. A united front is a strong negotiating position. This may not be the way things really are. The wife may love the house, but the husband wants to negotiate the price. You may not approve of some of the terms of the offer. If you reveal a break in your ranks, the sellers will consider your position weaker.
4. Keep a Grain of Salt.
A healthy skepticism is a good thing in negotiation. Not everything you are told is true. How many times have you heard that the contract has to be in this quarter, or the price is going up? Does the 1% bonus for contract this week mean that you have to rush your offer in? Is the price really firm? Proposals such as these show you what is important to the seller. The seller may want close quickly and for full price, but, on the other hand, the seller may want to close, period. I can think of many times when I thought the buyer's offer would never work, and yet, they got their terms.
5. Understand Special Needs.
A big part of negotiation is subtle. Little things make a big difference. Sometimes good deals go off track because of a difference in the style or personality of the parties. A misperception of the required tone can lead to a decline in trust. Some examples:
Slower Pace - The sellers were a couple in their 90's. Since they did not leave the house, the buyers met them several times. The buyers took extra time to sit down and talk, and formed a strong bond.
Holy Ground - The sellers had a small grave for their dog on the property, which they were very sensitive about. The buyers realized this, and sent word that they would leave it in place.
For the Birds - The sellers had numerous bird feeders on the property. The buyers keyed in on this, and offered to continue feeding the birds.
Get a Grip - The sellers' agent tended to give wrong information, did not handle details well, and was untrustworthy. In order to preserve the buyer's trust, it was necessary to double check everything, handle paperwork, and watch deadlines.
6. Keep private things private.
Buyers may have some issues that should be kept private. They may have just sold their house, and need to act fast. They may need to start kids in school. They may be in the middle of a divorce. They may have an interest rate that is about to expire. Not one of these pieces of information will get them a better deal on a house. In fact, they all indicate that they are under pressure. Your buyers should be perceived as folks who are well qualified, who truly appreciate this home, and who can be trusted to close.
7. Get good information.
Here are some questions to ask before you and your clients compose an offer:
How is the market in general? How are other actives and recent sales priced?
How long has the home been on the market? Have there been price changes?
Did the house sell recently? What was the price?
Is there a time deadline that must be met? Would a pre or post lease be desirable?
What is the appraisal district value? The taxes? The HOA dues?
Is a disclosure available? A property inspection? A survey?
Are there any offers expected, or on the table now?
Price is just one consideration in the negotiation for a home. Other terms, such as financing, close date, repairs, or possession date may be just as important. Negotiating for a house requires skill in giving and taking information, and in communicating to the seller that your clients are the best buyers for their property.
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ABOUT THE AUTHOR
Roselind Hejl is a Realtor with Coldwell Banker United in Austin, Texas. Her website - Austin Texas Real Estate - http://www.weloveaustin.com - offers homes for sale, market trends, buyer and seller guides. Let Roselind help you make your move to Austin, Texas.