Not Having a Negotiating Strategy in Mind

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Before Making an Offer

Price isn’t everything. Buyers need to look at the larger picture and also prepare
for writing an offer.

• 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, ask for a repair credit, or offer a lower price and handle repairs yourself? 
• What did the seller pay for the property? 
• What improvements has the seller done since they have owned the property and what is the value of these? 
• What are other homes similar to this one selling for in the area? 
• What is this home really worth? 
• What defects or potential defects are there in the home?
• What deferred maintenance is there? 
• How is the neighborhood?  Crime?  Noise?  Smells?  Ease of access?

What about low-balling? 

If the seller senses that you are in fact low-balling, they won’t take your offer serious and in fact may not counter it at all.  They also may be so put off by your actions that they won’t even consider a reasonable offer from you later. 

So how does one arrive at a starting point? 

Rules of thumb such as starting at 10% off list price don’t work really.  Some homes are overpriced by 15 to 20%, while others are priced on the money or maybe below market value. 

TIP: Set the maximum price that you would consider paying for the property.  Than start at a price below that maximum price that is still supported by facts, such as property condition and selling prices of other homes, but that still allows for some negotiation room with the seller.  However, be aware that sometimes when a home is priced right and there are other competing buyers, a full price or over full price offer may be necessary.

Also take into consideration the strength of yourself and your offer. 

For example, being pre-approved for a mortgage, able to close quickly or able to delay closing and allow the seller to rent-back for a period of time. 

• Consider the seller’s motivation to sell. 
• Is the home vacant or soon to be? 
• Have the sellers purchased another home or do they have another home under contract subject to selling the home you are interested in? 
• Has the property been on the market for an extended period of time including expired listings with the current agent or other previous agents?
• Are the owners divorcing?
• Has there been a death in the family that is forcing the sale?
• Is the property in foreclosure?

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.  That is one of the strengths of a true professional buyer agent.  They negotiate on behalf of their buyer clients every day.  They have developed the experience and special techniques to consistently help their buyer clients achieve success in the home buying process.

TIP: Before you sign a purchase and sale offer or contract, 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.

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