Following the recent recession, today’s consumers recognize that all real estate does not always increase in value. Many consumers experienced firsthand the negative financial impact of an untimely downturn when they had to sell their home. The result of this new-found wisdom is that today’s homebuyers are determined to avoid overpaying for a home and homesellers are firm in their intent to hold on to every penny possible when selling their home. For this reason, successful negotiation of a home sale or purchase has become more challenging in today’s real estate market.
Successful Real Estate Negotiation Strategies
For the Homebuyer:
To be successful in your real estate negotiation, begin by developing a price and negotiating strategy. If you are a buyer, meet with your Realtor behind closed doors before writing the initial proposal on the home. A critical piece of your strategy is to understand alternatives available to you. What is your “plan B” if the negotiation for this home is unsuccessful? Is this the only home that will meet your needs on the market today?
After exploring the alternatives available, review recent sales of similar homes. This will help to set the cap on your price negotiations. Also review current market trends with your Realtor. For example, how long do homes like the subject property stay on the market prior to a sale? How far off of the list price do sellers usually sell it for? Based on your findings, determine the most suitable offer for your negotiation.
For the Home Seller:
Similarly, sellers must identify their alternatives as well. The seller must recognize that if their home is not in high demand and buyers are scarce, the ball cannot die in their court at the negotiating table when a buyer does come forward.
To successfully complete a home sale or purchase, both the buyer and seller must feel that their interests have been addressed. For this reason, it is wise to take the time to hear and understand the other party’s interests. As an initial step, ask about the other party’s priorities beyond optimum pricing. This may include the seller’s interest in flexibility on their move-out date or the buyer’s hope to have amenities included in the sale. Identifying these “hot buttons” could seal the deal with more agreeable terms for you.
Finally, refrain from setting ultimatums or “final offers” during negotiations. Find a way to respond to any counter-offers respectfully to keep the conversation open. The evolution of an offer to an agreed upon contract can be cumbersome and timely due to today’s cautious consumers. Staying patient and tenacious will pay dividends toward your success at the negotiating table.