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By Emily John
As a real estate professional, its important to know your options, know how much you can afford and be prepared to walk away from the deal if necessary. Keep reading for more tips on how to successfully negotiate with your seller or lender during the home-buying process.
Understand the role of negotiation in real estate.
Negotiation is a key part of the real estate process. It’s a skill that can be learned and mastered, but it’s different from haggling. A good negotiator knows how to find common ground between two parties with different needs, wants and objectives. Negotiation involves give-and-take; there are no winners or losers in negotiations because both sides will benefit from reaching an agreement that satisfies them both–or at least most of their interests.
Know what you want – and what you don’t.
You need to know what you want and what you don’t want. This may sound obvious, but it’s not always easy for people who are new to the process. In order for your real estate agent or attorney to help guide the deal through negotiations, they need as much information from you as possible about what would make this transaction successful for both sides–and what wouldn’t work at all.
If there are issues that are important enough for any potential buyer or seller (such as pets), then be prepared with options: where could they go during construction? What would happen if they couldn’t stay at all? Do they have friends nearby who could take care of them while their owners were away?
Be prepared to walk away.
- Know your limits.
- Know the seller’s limits.
- Make a list of what you are willing to do to get the deal done, and then stick to it! If you aren’t willing or able to make an offer on a property that meets all of your criteria in terms of price, condition and location, then don’t waste anyone’s time by making an offer on it at all (and vice versa). The worst thing that can happen is that both parties walk away without any regrets because they know they did everything they could do before making their decisions.
Know your options.
When you’re negotiating, it’s important to remember that you always have options. You can walk away from a deal, or you can let the other party know that they’re not being realistic with their offer.
If you’re buying a home and your financing isn’t in place yet, then it’s crucial for both parties involved in the transaction–the seller and yourself–to know exactly how much money is available for closing costs and down payment requirements before entering into an agreement on price. This way no one gets surprised at closing time!
The same goes for sellers: if your motivation is purely financial and monetary gain rather than personal satisfaction from selling your property at its highest value possible (or even lower), then there may be issues later down the road when buyers come back asking questions about why certain features were left out during renovations/additions made by previous owners (who might’ve been more motivated).
Get more than one opinion on value.
If you’re buying a property, it’s a good idea to get more than one opinion on the value of your home. This may seem like an unnecessary step, but there are several reasons why this can help you negotiate a better deal.
First, if there are multiple people involved in the transaction (such as sellers and buyers) then having multiple opinions will make both parties feel more comfortable about making offers or accepting them. Second, getting more than one opinion gives you insight into how other people view your property’s worth and whether or not they think it is overpriced or undervalued. Thirdly–and most importantly–you’ll be able to use these opinions later when negotiating with sellers: if their appraisal comes back lower than what they originally claimed their house was worth then this can help counter their argument that they need more money because they bought at peak prices during last year’s market boom!
Negotiate the financing terms before you make an offer on the property itself.
Negotiate the financing terms before you make an offer on the property itself.
For example, if the seller is asking $500,000 for their home and you want to pay $475,000, ask for a lower interest rate or shorter loan term instead of asking for that extra $25K in cash at closing. The lender will be more likely to agree to your terms because they know they’re going to make money from this transaction anyway.
If you’re buying a home with cash and don’t need any financing assistance from another party (like an investor), negotiate terms like co-signers or second mortgages into your contract so that if anything goes wrong down the road–and things do go wrong!–you’ll have someone else there holding part of their end of things too.
Ensure that the price is acceptable to both buyer and seller.
The price is the most important part of a real estate transaction, so it’s important to ensure that both buyer and seller are happy with it.
The price should be based on market value and cost of rehabilitating the property. The market value can be determined by looking at similar properties in your area that have recently sold or are currently on the market. If you plan on fixing up an older house before selling it, you’ll also want to consider how much money will go into repairing and updating this type of property before setting a final asking price for yourself or negotiating one with potential buyers on behalf of their clients.
You should be comfortable with the total price, including closing costs, taxes and other fees before making an offer on a property
The closing costs for a property can be a big part of the price. If you are not familiar with these costs, it’s important that you ask your real estate agent about them before making an offer on a property.
If there are things that need to be done before closing, such as painting or landscaping, those expenses will also be added into your final cost. You should know what these costs are and how much they add up to so that there are no surprises later on in the process.
Conclusion
Negotiation is a crucial part of any real estate transaction, but it doesn’t have to be stressful or intimidating. If you’re prepared and know your options, you can make sure that both parties feel like their needs are being met throughout the process. Remember: in the end, everyone wins!
