If you are about to close the deal on (probably) the largest asset you will buy. You need to be on top of your negotiation game. Making the offer is merely the beginning of negotiation. It is no secret that one of the best ways to “make” money is through negotiation. We have thus compiled a list of tips to help you out if you are thinking about putting an offer on a property. Follow these five real estate negotiation tips and we guarantee that you will make the best of the deal!
Real Estate Negotiation Tip #1: Hire A Professional Real Estate Agent
This is the first thing you should do. Do some research and then hire a professional real estate agent. Your real estate agent should be someone you can trust to represent you. This way, you can get expert advice from someone who has great knowledge and who is experienced in the field. Always ask your real estate agent for help and take advantage of what they know that you may not. Also, try not to directly speak to the seller if you feel like you may lack the correct information or terminology or the how tos when it comes to buying property.
Related: How To Find A Real Estate Agent For Investment Properties
Real Estate Negotiation Tip #2: Time is Key
There are multiple aspects to discuss here. When it comes to real estate negotiation, time is a key component. According to research, the first five minutes of negotiation can predict the outcome. You still need to be patient. Often times, the seller will try to close the deal as soon as they can. You will want to do the opposite. Try, within reason, to elongate the process. Take your time when negotiating. Keep your offers going and try to counter-offer the seller. However, do realize that this can be tricky. So you need to learn just how much to stretch out the process, otherwise, you may miss your window because you were trying to have the last concession.
When it comes to manipulating time, you also could benefit from creating a sense of urgency. Use time as a tool to pressure the seller into accepting your offer. Additionally, even if your offer is slightly less than another buyer, you could use time as an advantage by offering to complete your payment within a shorter time period. After all, to the seller, “A dollar today is better than a dollar tomorrow.”
Real Estate Negotiation Tip #3: Do Your Research
You will need to gather as much information as you possibly can. If you think you already know everything, do more research. Ask questions about the property and the seller. Information is power. The more information you gather, the more you can help your argument during negotiation.
It is recommended to have your real estate agent speak to the seller’s broker. Sometimes they will not disclose information to you, but they might to someone who works in the same business/field.
You should also know what kind of a market you are in. Is it a buyer’s market or is it a seller’s market? If you are in a buyer’s market, where the supply is higher than the demand, the odds for getting a better deal are in your favor. If you are in a seller’s market, it is the opposite, so you need to be careful when selecting a property and making the offer. These extra bits of information help make a big difference.
Related: Is it a Buyer’s Market or Seller’s Market?
Have your agent conduct a comparative market analysis and figure out what the comparatives of your property are. This will help you know what buyers are willing to pay for the property, and how the property compares with other properties in the market. By knowing this information, you can place the best offer on the property and ensure it compares well in the market.
Before you make an offer, you need to figure out a payment scheme if the seller accepts your offer. You don’t want to negotiate and then end up having trouble paying. This can also help you make up your mind if you are stuck between options.
Real Estate Negotiation Tip #4: Learn To Communicate Well
This is one of the most important real estate negotiation tips. You need to make sure the seller knows where you stand. Make your position clear by communicating your offer, the expected closing date, in addition to the time frame and means in which you will pay.
An important communication tool is knowing what to say, when to say, and how much you should say. Sometimes being silent is the best thing you can do. Practice listening more than you speak. When state your price, do so strongly and concisely. Highlight how it will benefit both yourself and the seller. However, do not justify the offer by any means or provide irrelevant information.
We cannot say this enough, always consult your real estate agent. As mentioned above, they have years of experience in this field and know their how-tos when it comes to communicating with the seller or the seller’s real estate agent. So if you feel like communication is not your strongest suit, ask your real estate agent for help.
Related: 5 Skills Needed For Real Estate Investing
Real Estate Negotiation Tip #5: Be Positive and Confident
Even if things are not working exactly the way you hoped they would, do not lose control. Maintain a strong and positive attitude. Do not start imagining where your favorite sofa would go, or the swing set you will install for your kids in the front yard. Emotions will get in the way and they will blur your judgment. Take a moment to evaluate your options pragmatically. Think of this as a business deal. If it fails, you will close another one. This is why we stress that you research more options and keep an open mind when browsing and selecting property.
Above all, keep yourself grounded – you do not want to risk losing a property just because you wanted the last say. So, leave your ego at the door alongside your emotions!