Finding your dream home is hard enough and once you’ve found it, the process in a lot of ways has just begun. That’s right, you’ve got an offer to make and hours of negotiating before you sign the final paperwork and have the keys to your new home in hand. We’ve already discussed what to expect when negotiating a home purchase, but what happens once you’re in the middle of it all?
John Wenner, co-founder and professional trainer at the Real Estate Negotiation Institute says, “Negotiation is the key skill necessary to help achieve your goals. That’s why buyers should team up with an experienced agent with a negotiation plan in order to get what you want out of a home purchase.”So once you’ve found a trusted and experienced negotiating agent, follow these 7 tips to secure your dream home quicker and easier.
1. Know market trends.
Your negotiating power as a buyer varies greatly depending on the market you’re in. Supply and demand is key as well as comparables in the neighborhood you’re interested in. If there are tons of homes for sale in the neighborhood, then the seller will be more willing to negotiate price with you because you could easily choose to buy another home nearby.
If homes for sale in the neighborhood are scarce however, then the seller has more negotiating power because he knows you’re interested and only have few choices. Comparables are also important because they allow you to set a reasonable range for negotiating. Check out the Market Trends tool on the First Team site to see some specifics and start learning.
According to Wenner listening carefully is critical to the negotiating process. When you listen to the other side, you are able to truly understand them and their wants. Once you understand your seller, then you can effectively begin negotiations with them with a strategic plan in place to get what you want.
3. If there are multiple offers take a competition standpoint, not a negotiating strategy.
This goes along with knowing the market. Many transactions today are multiple offers because of the seller’s market we have been experiencing for the past few years. If you’re in competition with other buyers, it’s important to put an offer on a house that is competitive with other buyers. Once the seller chooses your offer, THEN you can start negotiating things like closing costs, repairs and buyer credits.
4. When you offer something, always ask for something in return.
Negotiations require give and take so you need to “give when getting”. For example when you give on price, secure yourself credits for repairs or negotiate for the washer and dryer. Wenner says, “To influence others, you should always be in a face to face setting and consider giving first so you can position the other side”. By coming to the table first with something to give, you’re more likely to get in turn what you want because you’re setting the terms.
5. Avoid extremely low offers.
While there is obviously room to negotiate price, it is important that you understand your ZOPA and be realistic. Let me explain – your ZOPA in a negotiation is the zone of possible agreement. This zone is the intellectual space where two party’s expectations meet and overlap in which an agreement can be made. As a buyer, you may think giving a lowball price is a great strategy to getting the price you want eventually.
However, if your lowball price is outside of the seller’s zone of possible agreement, you could offend them and they’ll never even enter into negotiations with you. Anticipating a seller’s ZOPA is crucial to deciding on the right price for your offer. Knowing what’s too low and too high comes from knowing market trends (see #1).
6. Keep emotions at bay.
No doubt about it, buying a home is an emotional process. However, an emotional negotiator is not effective. That’s why it’s best to let your agent do the negotiating for you; in fact it’s why you hired them. Letting your emotions drive negotiating and showing all of your cards makes you vulnerable and could lead to sellers taking advantage.
7. Understand the seller’s motivation.
Not only do you need to understand the seller’s ZOPA, you also want to understand their needs, wants and situation. The initial sale price on the home is just the tip of the iceberg in understanding them; you need to understand what is motivating them to sell. Are they looking to sell because they are going through a divorce? Are they retiring to a smaller home? Are they in a rush to move out because they’re relocating for work? Knowing the seller’s motivation is the key to engaging them in negotiations and getting what you want.
According to Wenner, “The only way to negotiate a win-win sale with a seller is to understand the goals of the other side and match them with your own.”If you’re in the market for a new home and would like the help of a trained negotiator, call or email us at First Team. We’ll match you with an agent who can help guide you through the process and help achieve your homeownership goals.