Negotiating

Think of the negotiation process as setting a range. The seller has already put a ceiling on the transaction. Only in rare occasions does a buyer pay more than the asking price. Your first offer then puts a floor on the range. If you go too low the seller will just walk away, so the trick is to choose the right negotiation floor.

Common sense would tell you that you have to submit an offer before you begin negotiations. However, negotiations start before you start looking at homes and continue through the process. You should be figuring out the floor of the negotiation range.

The first thing you need to know is; what is important to me. For example, I know from my own experience that time is of the essence for medical residents. So in some circumstances you would be willing to pay more money for a preferable move in date. Each situation is different. While you are looking, keep thinking of things that you want out of the transaction, such as whether certain appliances stay with the house. These criteria will be the foundation of the offer you submit.

The other major foundation of the offer is obviously the price of the house. The asking price of a house is NOT the value of the house. In fact the two may have no relation at all. A Competitive Market Analysis (CMA) will go a long way toward figuring out what to offer on a property. This is where your real estate agent really starts paying off.

He or she can look at what houses are selling for in that area presently and what houses have sold for in the last 6 months to a year. Then using that information, your agent can tell you what the house you are looking at should be priced for. A CMA is a tremendous tool in deciding what to offer on a house.

Other factors come into play in both determining your offer and the actual back and forth to determine the price. Most of these come down to the seller’s motivation to sell. If the house is empty that should be a red flag. Everyone has to live somewhere. If the seller is not living in the house that means they are living somewhere else, and probably not for free. This is a cue that the seller is anxious to sell.

Some people stage houses. That means they are paying a company to make it look like someone lives there. If you can tell it’s staged that means that not only does the seller live elsewhere they are also anxious enough to pay someone to stage the place. Look for personal photos and other personal items. (Oddly enough look for toilet paper. No one lives in a house without it but someone staging a house may not put it in.)

Market time is another big factor. The longer a house is on the market the better price you can get. This doesn’t mean ignore houses that just went up. It simply means keep that factor in mind.

Your real-estate agent should be able to walk you through this process. Again that is why they are there. This is another reason why it is good to have an agent. If you don’t have one click here and we can help you find one.