An experienced Realtor will be very skilled when it comes to negotiating the price of a home. Buyers want the lowest price possible, while sellers want the highest price possible. Negotiating the price on a home can be an intense process for all involved.
Some Important Tips
- Understanding the Market
- Research the property and the Seller
- Include a Personal Note
- Be Creative with your Negotiations
- Enter the Negotiation Process with the Ability to Compromise
- be Reasonable with Your Offer to Purchase
- Understanding the Market
- Sign Back Tactics
- The Power of Persuasion
- Working Around an Overpriced Home
Understanding the Market as a Buyer
The buyer should know what type of market they are heading into. In a buyers market, there are more homes for sale. In a seller’s market, the supply is far less. When negotiating in a buyers market, the buyer has more power to make offers under the listing price. The buyer can also ask the seller to pay closing costs or include appliances.
Negotiating in a seller’s market is far more difficult. The buyer has to move more quickly. There is also a higher chance a bidding war could happen. Putting in a firm offer can help buyers. Conditional offers can be lengthy and intense. Most sellers would jump at a firm offer, especially if the price is right.
If the market is balanced, the back and forth negotiating will end at a compromised price.
To determine what kind of market you are in, you can check CREA and CMHC for their reviews.
Research the property and the seller
Ascertaining why the seller is moving, can be a big advantage to the buyer. This insight can be very beneficial when preparing an offer. There are many reasons people want to or need to sell their homes. Separation and divorce is a common reason for selling the matrimonial home. Job relocation is another reason for selling. Quite often, the relocation company will pay for any losses their employee endures. This is a bonus for the buyer. Relocation moves are normally time-sensitive, and the need to sell fast may be the issue. Job loss, another reason a fast sale may be required. This could be a huge advantage to the buyer. Many people also sell to upgrade their home. First time home buyers often start small, then graduate to a larger home once they have built up equity. Many empty nesters tend to downsize once their children have left home.
It is always a good idea to do some research on the property itself. Having the knowledge of the length of time the house has been on the market is important. The number of times this property been listed could also be an indicator that there are issues with the home. You can research previous sales of the home to find out previous sale prices. This can help to establish a great strategy for negotiating the price of the home.
Include a Personal Note
It can be a good idea to include a personalized note when presenting an offer. Some people have an emotional attachment to the home they are selling. Explaining to the homeowner, the reasons why you love their home could possibly influence the sale to you. Tell them a little bit about yourself. Sellers often like to know their home is going to someone who would enjoy it as much as they have. Some people have compassion for first time home buyers. They like to see people get off to a good start in life.
Be Creative with your Negotiations
There are many things that can become an important negotiating factor. Negotiating the closing date can sometimes be as important as negotiating the price. When presenting a conditional offer, keep time frames short for home inspections. Offer a reasonable price, but ask for the inclusion of the appliances. Discovering the need for repairs can also be a good negotiating factor. The seller may accept a lower offer, or offer to make the repairs themselves.
Enter the Negotiation Process with the Ability to Compromise
If you really want a house bad enough, you have to be willing to compromise. Flexibility on certain terms and conditions is important in the negotiating process. If you are not willing to compromise on some issues, be prepared to lose the deal. Hiring a good realtor will be a great advantage when it comes to making certain concessions on an offer.
Be Reasonable with Your Offer to Purchase
Some people attend to put in a low ball offer. Sellers may feel offended and uncertain of your seriousness of purchasing their home. Trying to nickel and dime during negotiations can lead to a higher offer winning the bid. Playing give and take will get you farther ahead during negotiations. Always offer a fair price that will interest the seller.
Sign Back Tactics
Be reasonable about the time frame allotted on signing back an offer. Usually, a sign back is within a 24 hour period, unless there are extenuating circumstances. One of the parties to the offer may be out of town. Family illness or death could extend the sign back time period. Whatever the case, and however many times the offer goes back and forth, keeping the sign back time reasonable is important.
The Power of Persuasion
The psychology of sales is a great skill an experienced Realtor can possess. This skill can really pay off during the negotiation process. However, caution must be exercised that the Realtor does not cross ethical lines. Withholding critical information is illegal. However, that doesn’t always stop some realtors that will do anything to make a sale. Providing full disclosure is essential to maintain an honest reputation.
The power of persuasion on a positive note can lead a buyer to make certain concessions. It can also persuade a seller to accept a lower offer.
Working Around an Overpriced Home
Identifying the reasons why a home is overpriced can help with the negotiation process. Sellers that are not in a hurry to sell, maybe more difficult to negotiate with as they may stand firm with their list price. Some sellers may decide to list high for a certain period of time and then drop the price. Some sellers overprice their homes due to sentimental value and attachment. Most people always think their home is worth more than the going market value. Some sellers have to get a fixed amount from the sale of their home for various reasons. Getting the inside scoop on the seller can greatly increase the buyers negotiating abilities.