Real Estate Negotiation Tips You Should Know
Expert negotiation is an important part of real estate businesses. Depending on the property, you may have to negotiate directly with real estate agents, homeowners, cash home buyers, banks or financial institutions, and other players in the real estate business. Your negotiation skills should match the prevailing national and local real estate market.
With the increasing demand for homes, properties listed for sale close within a short time. You should make quick yet decisive financial decisions when buying or selling a property to avoid missing out. Outlined below are important negotiation tips that come in handy in real estate negotiations.
1. Create a win-win scenario
Skillful negotiators should focus on creating a win-win situation during the negotiation. Even though you want to score the deal, you shouldn’t oppress the buyer or seller. If you are a cash home buyer, like Mill City Homebuyers, hoping to buy a property for a low price, you can offer the seller some concessions. For instance, you can offer to cover the moving costs, representing a fraction of the expense but a large gesture to the property seller.
Smart real estate investors shouldn’t negotiate over one issue. You should have several topics lined up to convince the seller. Find out as much information, needs, and demands of the seller before the meeting. Through this, you can offer them what they want.
2. Don’t make the first offer
When negotiating a property deal, you shouldn’t make your price or initial offer first. A Harvard study found that those who name their offers second always get better deals and are less anxious after negotiations. The study found that those who make the first offer when negotiating felt anxious, less confident, and less satisfied with the negotiation outcome.
3. Be willing to compromise
Compromise is another successful negotiation skill. As you find ways of achieving a win-win situation, you should identify areas you can willingly compromise in the contract. For instance, cash buyers may offer to clean the property to reduce the sale price. You can also pay something more for quick closing. The key is thinking through the potential areas where you can compromise before approaching the negotiations. With this, you can avoid conceding a lot and an unsatisfactory deal.
4. Be ready to walk away
Another crucial negotiation skill is knowing the right time to drop the deal. While compromise is important to real estate negotiation, you should also hold your ground where necessary. Even if the property is your dream home, you shouldn’t negotiate with all your cards exposed.
Regardless of how perfect the opportunity seems, you should remain focused during the negotiations. If you want to become an excellent negotiator, tell the seller that you can and are willing to walk away if your demands are not met. The best way to avoid losing your ground in front of the seller is to ensure that you have other properties lined up. Knowing that other properties are available will give you the confidence to walk away.
5. Use an affirmative language
Using affirmative language is another underrated negotiation skill. While you shouldn’t change your mind in the negotiation room, using affirmative language can streamline your bargain. Affirmative language should express truth within a statement without using negatives.
For instance, you should include statements like; “the neighborhood is still developing” or “the property requires some renovations.” Using affirmative language in a friendly tone gives you a positive reputation, which is advantageous when negotiating. Your goal should be to close the deal within the shortest time and with minimal challenges.
6. Listen before acting
Listening keenly is an important component of fruitful negotiations. Even if the other party doesn’t meet your demands, you should be calm and check on your temper. Walking away from the negotiation room with a high temper not only puts an end to the deal but also harms your reputation and affects future deals.
Check your temper and leave your ego before starting the negotiations. Listen carefully to the seller before reacting. After you’ve made your submissions, give other parties a chance to respond before submitting counteroffers.
7. Negotiate in person
While advancing technologies have largely improved basic interactions, the power of texting and email has negatively affected daily conversations. As such, real estate negotiations, and other negotiations, should be done in person. Face-to-face conversations are important as you can be confident all parties are fully updated and can’t be misinterpreted as can happen in written communication.
Unfortunately, face-to-face negotiations are not possible in all situations, especially if you have busy schedules or handling long-distance deals. If such is the situation in your real estate deal, the best option is to speak over the phone. While it eliminates the ability to read basic reactions and body language, it is more effective than emails. Also, remember that negotiations shouldn’t necessarily be completed within one sitting. You can create an agenda and conduct separate meetings.
8. Know what is negotiable
Real estate agents and investors should know what can be negotiated and what can’t. Below are some things that can be negotiated:
The price – While it seems obvious, most realtors negotiate the price first. Sellers anticipate high prices, while buyers want the least possible price point. Negotiation helps both parties find common ground.
Closing costs – Buyers can request property sellers contribute to closing costs.
Home repairs – Most cash buyers don’t discuss home repairs with property sellers. However, real estate agents often negotiate home repairs.
Appliances – Property sellers often include staple household appliances, such as a dryer, washer, and microwave, in their listing price. Buyers should inspect and negotiate where possible.
Furniture – Some sellers also dispose of their furniture, especially if they are downsizing or moving to a bigger house. Furniture and other furnishings are up for negotiation.
Real estate professionals should be ready and willing to negotiate for various properties. Fortunately, general negotiating skills apply in these situations.
To increase the chances of your offers being accepted, you should be well versed in the basic negotiation strategies. The tips mentioned above can help you negotiate with utmost confidence.
About the Author
Ronica Samuel: I began writing as a professional on my personal blog and then discovered my true calling, which is writing about technology, news and gadgets in general. I have been a technical writer, author, and blogger since 2010. I am an industry watcher who stays on top of the latest features and am extremely passionate about juicy tech news and anything related to gadgets.