Gather intel. You’ll need to gather as much information as possible. Then you will know if you need to be negotiating low or to start with a more aggressive offer. Each property is unique, therefore each negotiating situation is unique. Here are five things you need to do to gather intel on a property:
Who Owns The Property?
How you negotiate with an owner vs an investor, are vastly different situations, so knowing who owns the property is vital information. Ask your agent these questions:
Who owns the property?
How long have they owned the property?
Were they living there or was it an investment property?
Next thing you’ll want to know is when the property was last sold and how much the property was sold for. This gives insight into how much the owners will be looking for and whether or not they’ll be flexible on price. If they’ve earned it for thirty years, they will probably be more flexible than someone who only owned for 6 months.
Why Are The Owners Selling?
Divorce, a deceased estate, moving to another city, are they being forced to sell? These are all possibilities that will help you understand why the owners are selling the property.
Comparative Market Assessment
You can get a CMA done by your agent to find out what similar homes in the area have sold for. Knowing this you can know what to offer, and if the asking price is accurate to home value or not.
Tools of the Titans
Next step is to dig deeper, and this will give you much more knowledge on the property and the agent. This are the tools you will need to use:
Property Prediction - will hint at where the negotiation might end, and where you should begin
Everything About the Agent - figuring out how good or bad your real estate agent is. The more you know the more you can prepare. You can check out sites like domain or ratemyagent. You want to know how many properties they’ve in the last year and how long it took and for how much.
Lowballing: 3 things to keep in mind
Can you offer less than the asking price? Yes. But watch out, if an offer is too low, it can run the risk of just getting ignored by the sellers.
How much should you offer on a house? You want to be within 10% of the asking price, any lower can run the risk of not being accepted and any higher you’re paying way over.
What is considered a lowball offer? Anything below 10% of the asking price is considered a lowball. Say the asking price is 500k and your offer 400k, since this is lower than 10% of the asking price, there is a high chance of the seller not responding to this offer.
Mistakes To Avoid When Negotiating
Here are 6 big mistakes a buyer can make when negotiating:
Speaking Rather than listening - The one who does all the talking isn’t the one who wins. The who asks the questions is the one who’s in control, in doing so, you dictate where the conversation goes.
Being Over Invested in the Result - In negotiating there are many things out of your control, the sellers limitations being one. So, don’t make yourself too attached to a certain end result. Keeping your emotions in check, and sticking to your game plan, will wield the most success.
If you Fail to Plan then Prepare to Fail - It’s as simple as that, have your game plan set before you begin negotiating.
Revealing All your Cards - Don’t reveal too much that might put you at a disadvantage.
Not Creating Dialogue - You want to keep and maintain a good dialogue throughout this process. Keep your cool, show respect, and keep everything “Politically Correct” so to say.
Assuming Everything is Set - Everything is up for grabs and anything can be negotiated. If it applies to the terms, all that is on the table can be agreed upon. It’s terms vs price, if your counterpart is pushing price then you should push terms, and vice versa.
Always make sure you put everything in writing. Be sure to ensure a deadline when your offer is no longer valid.
Biggest thing to take away is that price isn’t everything.
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