Negotiation anxiety–trust your Realtor!
Here you are–you’ve found the perfect home, and you are ready to make an offer. You are probably feeling a bit anxious at this point. How do you know how much to offer so the sellers will accept it without giving up too much of your hard-earned deposit and ending up with more mortgage than you want? Read on for this realtor’s best advice on real estate negotiation after over 25 years in the business!
Check your head
What is going on in your mind when it’s time to negotiate a real estate deal? Psychologists say most people worry that they may be cheated or taken for a ride when before they even enter negotiations. And some people think of it as a competition where someone wins and someone loses. The best way to enter any negotiation, including real estate, is to come from a win/win position. If you are afraid of losing, then the negotiation process of a real estate deal can be more anxiety-producing than most people feel at this stage anyway.
Check the market
Now that you have a handle on your emotions, turn first to your realtor. Since we (your realtor) aren’t going to live in your home, but do want you to be happy with your purchase, we have just the right amount of skin in the game and just the right amount of objectivity. We are going to give you an objective view on what the property is worth and what the chances of appreciation are. And we know you as our clients and as people, so we understand your needs and wants behind the home you are negotiating for. We do not want you to fail, and we do not want you to have buyer’s remorse.
The first thing we will do for you is start with a market analysis. We will tell you what similar properties in the area have been selling for and if the market has been on an upward or a downward swing. We are going to look at things like how long the seller has owned the property, how long it has been on the market, if any other offers have been made, how much the seller owes on the property, if the payments are current, and when the listing expires.
We will work with the seller’s realtor to find out what the seller’s motivation is, which helps us to know if we can afford to go a little low and still get the deal without anyone feeling bad about it. Remember, we all have the same goal at the end of the day. The seller wants to sell and you want to buy. In many ways, the question boils down to what kind of market you are trying to buy in. In the La Grange, IL area market, we are talking about a seller’s market (in fact, most of the country is currently in this trend.)
Some other things we will help you look at might be anything that might affect the value of the property like hidden problems that would turn up in an inspection or nearby issues, like new construction or businesses that might be closing.
Check what is open for negotiation
There are often several sticking points in a real estate negotiation, which can also be used as opportunities for both parties to get what they want.
Closing costs are often one of these areas. Who should pick up the cost? Again, depending on your market, it may all fall on the buyer, all on the seller, or be split in some way that makes everyone feel good about the deal. Recently in the La Grange, IL area, for example, typically the buyer pays the closing costs; however, many sellers are often open to helping or offering concessions in lieu of paying the closing costs.
Other inclusions are also opportunities for you and the seller to come to an amicable agreement. Things like appliances, drapes, chandeliers, and other furniture may be included in the selling price, especially if the seller if moving into a home that already has these items. They also may simply not want to move them. On the other hand, would buying your own washer and dryer be a deal-breaker? Only you know how important these types of items are.
Other items you might be able to negotiate are repairs and home warranties. Minor repair requests are only going to aggravate a seller, so asking for a new coat of paint is not really your most powerful position. However, if the hot water heater is 20 years old, asking for a new one or a warranty is a good idea and one that nearly every seller is going to request.
And lastly, you may be able to offer the seller a leaseback option, so they have time to find a new home and don’t have to move twice in the process. You still take possession of the property on the date you’ve agreed upon, but the seller stays on as a tenant and pays you rent until they have located a new home. This often instills goodwill in the seller as well as a willingness to bend on some of your other important requests.
Check your bottom line
Just how much wiggle room do you have? Are you willing to walk away from the deal if you and your realtor feel the seller is being unreasonable? Be sure you give your realtor all the information you can. We are here to get you the best deal, so you must let us know what your bottom line is. When you tell us the most you are willing to pay, we are in a better position to get you a deal that falls in line with the lowest price the seller is willing to accept. So trust your realtor, and you will find yourself feeling good about the agreement you come to with the seller–smiling at each other across the table on closing day!