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By Mary Aspen Richardson
Buying an investment home for the first time is exciting, but it can be equally challenging. The moment you enter the market, it’s like you stepped into an aquarium full of sharks, and each shark wants that piece of food you want. Okay, it’s not always like that. However, a lot of times bidding wars and all that comes with them can be pretty exhausting. If you’ve determined you want to swim with sharks and win the race, we’ve prepared this first-time buyers’ guide to real estate negotiations.
First-time investors’ guide to real estate negotiations tip: research, research – and more research
When entering a conversation you know nothing about, find out as much as possible about it. Only knowledge is power; the sooner you gather that knowledge, the better the outcome. So, make sure to spend some time on the internet and familiarize yourself with terms and expectations. Doing extensive research is not just for younger, first-time buyers. It’s one of the best habits that all successful investors have. Also, investigate all the experts you’ll need to contact and check the reviews of some best picks. That will give you a head start and make the process easier.
Have a plan
The most critical step you can take toward entering any negotiation with confidence is to have your financials in order. And confidence starts when you work out your plan. First, make sure you know what your budget is and have a conversation with your bank or mortgage broker to be pre-approved before you even begin browsing or negotiating for a home.
You’ll need to show the seller you can qualify for a mortgage loan. What will happen if you offer a house before you have evidence of money? The odds of a customer choosing you over another candidate are pretty low. Submit an offer only after you’ve confirmed you can acquire a mortgage loan. A pre-approval letter from a mortgage lender lets sellers know you’ve been accepted for a particular loan amount and may go forward with purchasing a house. It’s crucial to have all this in order before considering buying a home to avoid any unpleasant surprises.
It’s good to estimate the cost of everything
Even at the beginning of the process, it’s good to imagine that you’ve already won the negotiations. That means you need to consider the costs of other professionals you’ll need to hire. Don’t let the unplanned moving cost make a jump scare on you. Put everything on paper and consider all the costs, like:
- packing
- storage
- transportation
After all, this will also bring a dash of positive thinking, as you’ll assume that you’re winning from the start.
Cooperate with a reliable real estate agent
Because real estate listing sites are so easily accessible, many homebuyers falsely feel they no longer need to work with a real estate agent. But a real estate agent’s services extend beyond that. When it comes time to negotiate the price of your house, your agent will be an invaluable tool in guiding you to a reasonable offer. So don’t overlook the tips in our first-time investors’ guide to real estate negotiations and work closely with an agent.
Agents in the real estate industry have extensive knowledge of the property market in your area. They are conversant with the ebb and flow of interest rates, the properties likely to appreciate, and the likely tax burden associated with various real estate investments. Professional real estate agents can put their feelings about a property aside throughout the purchase.
For instance, they are better positioned to fight on your behalf. In addition, a real estate agent will be able to assist you in creating the most robust offer letter possible, with all the necessary safeguards, to ensure your interests are protected.
Present the sellers with an attractive proposal
In an auction, the seller’s goal is to get the highest possible price. To avoid an auction, it is in your best interest as a buyer to be able to negotiate a fair price with the seller. Some sellers may be concerned that the day of the auction won’t bring in sufficient interest from qualified buyers. Still, others may be eager to sell soon since they have already found their new place to live. Some sellers may choose to find a buyer who would maintain the house rather than demolish it.
You may call the real estate agent or stop by their office with a deposit check in your offer amount. If the seller rejects your first offer, you may raise it over time without exceeding your limit.
Leave your feelings at the door
Putting aside any sentimental ties you may have to a home before making a purchase is crucial. Whether at auction or by private agreement, you must have the option to back out of a transaction if the price is too high. Sometimes sellers have a firm price in mind and refuse to compromise. If it’s not meant to be, there will be another house along that will be a better fit. If you can maintain emotional distance during talks, it will be easier to maintain command of the situation.
Confidence is the key
Like in any other conversation, your confidence boosts your chances of winning. Doing research and all the things we mentioned above, this first-time investors’ guide to real estate negotiations will only give you confidence and boost your self-esteem. It’s psychologically inevitable that the seller will have a better opinion of you if you approach the negotiations like you own the world. Of course, no first time can be perfect, and you might feel fear and excitement. That’s completely normal. But, sometimes, you need to fake it till you make it, and even if you’re not sure that you’ve got the situation under control, acting like it will boost your odds.
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