How Good are You at Negotiating?
That was a question that came from left field from my buyer client and caused me to ponder the purpose of that question before I responded. This client was getting upset at not being able to find a home to purchase.
Part of the frustration was the size of the house needed and the amount of money she was able to spend. The additional frustration was borne of the lower than normal inventory for being in winter.
Her thought was to go well beyond her upper financial cap and attempt to get the sellers to negotiate down to her comfort level. There are many factors that need to be considered when evaluating the house one wants to buy and how the process of getting a good deal is worked, or negotiated.
First, assuming the idea house has been found, the real estate agent for the buyer has several ways to determine how much leverage they might have when negotiating the contract. Has the house been priced competitively for the market and for the current condition of the home? And over priced hone may have a lot of movement potential, but if the sellers are trying to hit that big slam themselves, they might be less likely to give up much. Stands to reason if they had the house listed too high.
What Types of obligations are there against the house? A trip to town hall will allow the agent to see what types of encumbrances, or liens, there may be on the property, all of which would need to be resolved, before the home could pass title to a new owner.
HELOCs, or lines of credit in the form of equity loans could be there and have money owed against them. Tax liens or mechanics liens for work done but not paid, or even judgments against a title holder of the home.
How Can An Agent Get Us a Good Negotiating Position?
Negotiating strength comes first from having a sound offer. This starts with a pre-qualification letter from a lender that may not only show the value for which the buyer is approved, but also a property specific letter. This lets the sellers know that their agent has talked to the lender in depth about the property. The agent may ask that the letter show a value less than the total amount the buyer can pay.
If the property is high for the market, then the offer can be sent forward with recent comparable sales. These may serve to reinforce the agent's claim to their sellers that the home is over-priced and that it is apparent to anyone that takes the time to do some research. This may allow the agent to get some concessions on price for the buyer.
A low-ball bid strictly to get a strong negotiation should be looked at by the sellers as just the start of the process. A counter offer of reasonable value will let the buyers know they will negotiate but are not willing to come down to that low-ball price. If the buyers and sellers use their common sense, they may reach a common ground and get the contract initiated.
With all the information available to a consumer online, it is possible for a buyer to have a good feel for a home price and respect and understand that the sellers want to sell it at a reasonable price, just as much as the buyers want to buy it for same.
How Good are You at Negotiating?
Do you know somebody who is behind on their mortgage and doesn't know what to do? I may be able to help them, especially if they are facing foreclosure!
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