There is an art to counter-offers and real estate negotiations. It’s where having a talented real estate agent really pays off since his or her communication skills can greatly influence a seller’s decisions.
The buyer can help, however. They can set themselves up for success by learning a bit about the negotiation process.
Start Real Estate Negotiations off Strong
Buyers should enter the negotiations from a position of power. Mortgage pre-qualification, for example, isn’t likely to be enough. All-cash offers are nice, but they aren’t always an option. Pre-approval or commitment letters are much better because they mean a buyer is more likely to be approved. It can also help if a buyer doesn’t have to make the purchase contingent on the sale of another property.
Avoid Jumping into Action without Careful Planning
Responding to rejection by offering more money is a knee-jerk reaction that can get buyers into trouble. While raising the purchase price can work, buyers can’t be too generous. Bidding more than a property is worth can cause issues with the mortgage lender. It could also make the property hard to afford or resell later on. Buyers also need to be aware that sellers don’t automatically accept the offer with the highest price. There could be other options, so it’s important to think them all through before making a decision. (Related: 3 Easy Tricks To Avoid Buying The Wrong Home)
Buyers frequently jump the gun by removing conditions and clauses from an offer to purchase. Removing a home inspection requirement, for example, would make the offer more attractive to a seller. Unfortunately, it could prevent the mortgage from going through. Alternatively, the buyer could wind up paying for a house they can’t live in or rent out due to structural issues.
Both Parties Can Win in Real Estate Negotiations
When negotiating terms, a real estate agent will look to create a win-win situation. To do this, he or she will often include conditions that are nice for the buyer, but painful for a seller. This allows the agent to remove conditions that cost the buyer very little but benefit the seller and make the offer appear far more attractive.
A seller’s needs and motivation can give the buyer hints about how to approach a sales offer. Property sales motivated by death or divorce, for example, could mean the seller wants a swift sale. A retired couple looking to move, on the other hand, has the time to negotiate and be fastidious with an offer’s terms. In both instances, being smart about how to approach the sale will result in both parties getting what they want.
Precision Is Key to Offer Acceptance
An error in the documentation will drag out negotiations. Making corrections also creates an opportunity for a seller to counter-offer. Therefore, make sure the offer to purchase is accurate and includes everything it needs.
Real estate negotiations are more of an art than a science. To be successful, buyers and their agents need to be careful about how they approach the situation and in how they communicate. This sounds difficult, but when they get it right, both parties can walk away happy with the results.