Negotiating the transaction is usually the most complex aspect of buying a home. At the same time, it’s the one that can involve the most creativity. That’s why it’s important to have an experienced and savvy REALTOR® who has successfully worked through many different transaction scenarios.
That said, what follows are a few strategies for negotiating a good deal in a buyer’s market like this one, all of which involve: presenting yourself as a serious buyer while, at the same time, keeping your emotions in check; trying to understand and respect the priorities of the seller; being creative and, where necessary, willing to compromise to get the deal done.
Strike A Balance – Motivated But Not Too Eager For you, as a buyer in a buyers’ market, it all starts before you even make an offer, the first time you see that home you think might be THE ONE. It’s important that you not give yourself away to the listing agent by getting too excited about your “find”. If anything, ask a few questions, maybe take a few notes, and let your REALTOR® do most of the talking.
Ideally you’re trying to strike a balance by appearing to be a qualified, motivated buyer while, not appearing to be too eager. You’ll demonstrate that you’re a serious buyer – the kind sellers look for – at the time you make the offer, particularly if you:
- Have already sold your present home (if you have one); or in any case, make it clear that you’re not dependent upon selling in order to buy
- Make an all-cash offer or show that you’ve been pre-approved
- Provide an attractive “earnest” deposit with the offer
- Make an offer that still gives you room to negotiate your price
- Not only will this approach show that you’re qualified and motivated, it will place you in a stronger negotiating position overall. The sellers won’t want to lose you and so will be more inclined to reduce their price a little and/or make some concessions with respect to terms
- Understand And Respect The Seller’s Priorities If, through the negotiations, you can find out more about the seller’s situation and priorities you’ll not only improve your position, but you’ll also be able to resolve any obstacles more creatively and sensitively.
For instance, if a seller is adamant about the sale price they might be more flexible about taking care of a few repairs or part of the transaction costs. Or if they need a certain closing date, you might be able to get them to concede some other terms. There are no “one size fits all” approaches to negotiating, particularly in the current market when there are so many distress sales. In general, the more you know about the seller’s priorities, the more you’ll be able to work with them in order to achieve your own priorities.
Look Beyond The Price
While a home’s sale price is generally the focus of negotiations, often sellers will have needs such that the terms of purchase can significantly influence the final deal. Additionally, it is in relation to the terms – which can represent thousands of dollars in value – where you can get most creative when it comes to resolving the obstacles to transacting. Here are some elements in the purchase agreement that you might put on the table for discussion:
- An all-cash offer by you
- The amount of earnest money deposit you provide
- Closing and Possession Dates
- Inclusion of furniture, fixtures, etc., not considered part of the property
- Payment for repairs required by your lender
- Payment of taxes, utilities and rents
- Payment of title search and insurance
- Payment of survey, transfer taxes and recording fees
- Payment of general and termite inspections
- Payment of attorney’s fees
Along these lines, the key is to get all terms of purchase in writing within the agreement. These terms should then be carefully reviewed and clearly understood by both you and the seller so that you’re on the same page and the negotiations move forward.
Is It Really THE ONE? If So, Make It So
Even in a buyers’ market like this one, if you’re really interested in buying the home you’re negotiating over – if it really is THE ONE – you should be willing to make some compromises to make the deal happen. If that’s not the case, then you should listen to your heart and consider looking for another home – it just might be out there waiting for you . . . That said, here are a few basic principles of successful negotiation to consider if you’re committed to completing your purchase:
- Remember your priorities and respect the seller’s – don’t let small things get in the way of your better judgment
- If necessary, defer until later – if small issues do get in the way in the midst of big ones, focus on and consolidate your agreement on the big issues and come back to the small ones later
- At the end of the day, if there are disagreements about relative small expenses, split the difference and smile
The reality is that most negotiations proceed without much problem. In the event that there are difficulties but you’re committed to buying the home, remember: where there’s a will there’s a way.