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Negotiations in real-estate deals are all about compromising and agreeing in order to close a transaction. When negotiating, the negotiator should know the needs of the client. Legal knowledge is important since the negotiator should be able to identify the legal processes that could be done to achieve the client’s needs. Negotiators are usually real-estate lawyers, although real-estate agents would also negotiate for their clients.
To get successful negotiation results, it is important to be informed, prepared and set realistic goals or objectives. If you are a buyer and you have come across a house you are willing to buy, then you would have to be properly informed of how much the property would cost. You could ask your agent to compare it similar properties which are already sold. This is called Comparable Market Analyses or CMA. In CMA, the condition, size, number of rooms of both houses would be compared.
After being informed, then you would have to prepare for the negotiation. You could start by setting a realistic amount of money you are willing to spend on the property. When making decisions about buying or selling a home, never let your emotions get ahead of you. Follow and execute the plan.
There are different real-estate negotiation tips that would make both the buyer and seller satisfied.
- You start with an offer that you know that they would not be able to refuse and not a quote that would make them angry or roll in laughter. When presenting the offer, make sure that you or the negotiator would state what and how both parties would benefit from the deal.
- It is normal that the opposite party would ask questions and state their expectations, be confident when answering. Be cool and calm, even if the arguments are pushing you to your wit’s end. Present the answers in a way that would help them see that they have a way of getting out of the deal.
- You do not have to say or show how desperate you are to purchase the property. If you would like to convince the other party to give-in, don’t overreact with the offers or quotations or try bluffing with the other party. Be straightforward with your win-win solution and be prepared to counter their arguments. Look for loopholes and weaknesses which would help turn the table around.
- Be realistic. Do not overprice nor underprice. Usually, a buyer would have to spend a little more than what you are willing to, to get the house and the property that they would like to have. Asking for a very low price is an insult to the person who is selling the property.
- When starting with the negotiations, it is better to correspond with written documents. Oral commitments cannot stand or are not duly recognized as a binding agreement by some states.
- When negotiation, do not fret over small details. There are negotiations called off because of small issues that could easily be dealt with. If the transaction would not push through, then major things should be credited with the failure.
In real estate negotiations, it is a compromise that would work and enable both parties to close the deal. Both parties could start with the points that they both agree on and deal with the differences later. Sharing a common ground makes it easier for both parties to come up with win-win solutions.
Bill Manassero is the founder/top dog at “The Old Dawg’s REI Network,” a blog, newsletter, and podcast for seniors and retirees, that teaches the art of real estate investing. His personal real estate investing goal, which will be chronicled at olddawgsreinetwork.com, is to own/control 1,000 units/doors in the next 6 years. Prior to that, Bill and his family lived in Haiti for 11 years as missionaries serving orphaned, abandoned and at-risk children.
