Negotiating Strategy
Homebuyers need to take a look at the larger picture beyond just price before making an offer. “Look Before You Leap” is a good strategy here.
Before writing an offer homebuyers need to consider many factors, such as:
- What price should you offer?
- What other terms should you consider?
- What closing date?
- What contingencies?
- Should you ask the seller to make certain repairs?
- Should you ask for a repair credit?
- Should you lower the price and do repairs yourself?
- What did the seller pay for the property?
- What improvements has the seller done?
- What is the value of the seller improvements?
- What are other homes similar to this one selling for?
- What is the home really worth?
- What defects or potential defects are there?
- What deferred maintenance is there?
- How is the neighborhood? Crime? Noise? Smells? Ease of access?
Other considerations:
- Low Balling?
- Starting Price?
- Rules of Thumb, such as 10% off listing price?
- Competing Buyers?
- Set “Your” Maximum Price?
What Are Your Strengths?
- Are you pre-approved for a mortgage?
- Are you able to close quickly?
- Can you delay closing or occupancy if needed?
What is the seller’s motivation for selling?
- The home is vacant or will be soon.
- The sellers have found a new home and need to sell theirs in order to buy the new home.
- The sellers purchased another home and are carrying the expenses for two homes.
- The property has been on the market for an extended period of time.
- The property is in foreclosure.
- The sellers are getting divorced.
- The seller is a bank, an estate or a relocation company.
Other negotiating considerations include:
- What is the likely counter offer from the seller?
- What will your next counter offer be?
- What can you give up in the negotiating that isn’t as important to you as it is to the seller?
Successful negotiating is a complex process. You need to be very aware of the nuances of negotiating in order to get the best price and terms. Before you sign, do your homework. Develop a strategy. Seek assistance. Don’t be afraid to walk away if the seller refuses to meet your price and terms. A deal sometimes can still be consummated several months down the line at your price and terms, once the seller softens up a bit and no other offers come in. Be patient and you will be rewarded with a great deal on a home.