You know it’s important to hire an expert negotiator when buying a home, but did you know that by doing your research, you can also keep the sale on track? Here are five insights you can use when buying a home that requires negotiations.
1. Determine leverage
Sometimes, leverage is based off local market conditions. When there is a shortage of homes for sale (as there is now in many areas), sellers may expect to get their listed price because buyers are competing over a small pool of homes for sale. When there is an abundance of homes on the market, buyers hold the advantage and may be able to underbid and still get their desired property.
Of course, there are other factors that can give a buyer or seller an advantage. Buyers may benefit if sellers need a swift path to closing or can’t afford their monthly mortgage payments. And even in a buyers’ market, in-demand homes in trendy neighborhoods may fetch multiple bids and a higher sales price. If you find a home you love and aren’t sure who has the leverage, talk with your REALTOR®, who can provide insights and context.
2. Leverage comparable sales
Your Realtor will have access to comparable sales, often called “comps,” in your desired neighborhood. Comps will show you the average sales price and time on market of similar homes. These numbers can be invaluable as you determine your bidding and negotiation strategy.
Think of it this way: If you were bartering for a $50 lamp at a flea market, you might have no idea where to start for your first offer, but if you knew that a friend had bought a similar lamp from the same vendor for $35 last week, you could safely assume that a $35 offer would be reasonable. This same idea can be applied on a grand scale when putting together an initial bid based off comps in your desired area.
3. Respond immediately to counter offers
If a seller responds to your offer with a counter offer, it’s important to work with your Realtor to respond to it quickly. In fact, you may even want to discuss how high you’ll go in a counter before you make your initial offer. That way, if a counter offer comes in, your agent can verify the number you’d previously discussed still holds, rather than starting the conversation over from scratch.
4. Understand the terms of purchase
When your offer is accepted, you and your Realtor will review the purchase agreement to see if you’ll agree to the seller’s terms. Some sellers may add in special clauses saying that the sale does not include a prized chandelier or brand-new stacking washer and dryer units, and you’ll have to determine if these terms are deal-breakers.
Remember, the party with leverage may not see the need to budge, so it’s important to enter negotiations with open eyes. Once the purchase agreement has been drawn up, it’s up to the buyer and their Realtor to determine what’s worth fighting for and what can be accepted.
5. Never cut out the “middle man”
Keep in mind that while it may be tempting to directly negotiate terms with the seller, you should avoid this path. First, negotiations are about staying closely guarded without appearing too closed off, and Realtors know how to expertly navigate these tricky waters. If you appear eager to settle a term, you may give up any leverage you have earned so far. Plus, by calling the seller directly, you may really be cutting out your expert while the seller is still consulting with their listing agent to get the best terms.
Last, the language of real estate contracts is complicated and requires the eye and experience of a professional. By negotiating a contract verbally (and outside the terms of the listing agreement), you may not end up with a contract that reflects your handshake deal. Your Realtor will ensure everything is legally sound and in writing.
Start your home search
Before you can begin bidding or negotiating, you’ll need the help of a local expert who specializes in getting to the closing table. Edina Realty’s 2,300 Realtors work every neighborhood in Minnesota and western Wisconsin, and we’d love to put you in touch with the right agent for you. Reach out today to get connected.
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