Real Estate negotiations are important to accomplish a successful deal. It is more of an art than a skill but here are some simple reminders to keep in mind.
- Give and Take: I think this is a very important step to take into consideration when negotiating. Keep in mind you want to accomplish the same goal as the person you are negotiating with which is a successful deal. No one wins when there is no deal in place. If you can determine something important to a seller for instance a fast closing date, you can leverage on negotiating a better price.
- Start low but be reasonable. This is an effective strategy in order to have an idea where the seller wants to be in his numbers. For instance, if you offer 175K on 200K and the seller counters at 192K, then the negotiations will be moving towards your favor. If the seller rejects your offer, it means he is asking for a number close to his asking price. In this instance, you have determined quickly the seller motivation.
- Learn how to look at value instead of condition. I think this is the most common mistake I see in Real Estate. I will illustrate the mistake in the following example. A year ago, I previewed a home which was in a bad condition. The home had ugly green carpet colors, A/C needed to be fixed, pool was not maintained, needed paint inside, etc. However the home had a beautiful large pool overlooking a pond, a very nice floor plan with very high ceiling. We paid 150K ALL CASH and bought the property AS IS. We have probably spent 10K with new flooring, paint etc to fix up the home. As of today, the home is easily worth 210K. The most successful Real Estate investors look beyond condition or list price, they look at the future potential of the property.
- Chasing impossible deals. This is another common mistake I see often where the Buyer is underalistic or not in touch with the market. If you find a deal you think its good and already priced agressively, there is no need to negotiate any further. I have seen Buyers ruin deals and lose a property a year ago when negotiating too agressively with Banks and now those homes are worth a lot more than what they are today.
Real Estate negotiations can be accomplished successfully. It’s always important to keep in mind that the person you are negotiating against is more of a partner you want to accomplish the same goals with and not an opponent.