The art of negotiation for buying a home is exactly that, an art. It takes a keen understanding of the process in order to be good at it–and before you begin making offers on homes.
When it comes to Real Estate matters, the 3 most important aspects of an effective negotiation are:
| 1) Information |
| 2) Preparation |
| 3) Realism |
Being a good negotiator does not come naturally to most people–it must be worked at–is the first step in becoming one.
Information
CMA’s–Comparable Market Analyses
Once you have found a home that you are prepared to buy, the first step in your process of negotiation is to determine a fair value of the home. Your Mary Beth Hurtado Agent can be of great help. Real Estate Agents have access to the information that you need with aComparable Market Analyses (CMAs). A CMA will show exactly what properties similar to the one in which you have an interest have sold for. These analyses are based on fact, rather than opinion, and that information will always be of more value to you. The CMA which you obtain will most likely give you some general information about the houses that will be compared: Number of bedrooms and baths, square footage, the listing price and the sold price. It is important that the CMA focuses on houses similar to the one you have selected. If you are interested in a 4 bedroom, 2 1/2 bath 2 story, a CMA that lists only 3 bedroom 1 bath homes is of little or no value. Likewise, a CMA that includes a number of properties from a neighborhood 2 miles away will have limited value. To have a good CMA you must have all of the similar sales in the neighborhood in the last year. Obviously, the fresher the data (the more houses sold in the last few months), the better the CMA.
Condition
Once you have the information in hand, it is important to drive by all of the properties that are listed to see the condition, this has much to do with the ultimate selling price of a house. Does the home in which you are interested shine above or fall below the others that have sold. Size, number of rooms, and lot size can only tell you a lot.
Motivation
An effective negotiator will gather as much information as is available on the house and the sellers. Obviously, one of the most important pieces of information you can have is the seller’s reason for selling. Is it a case of having to sell or wanting to sell? If your Agent represents you in the transaction as a Buyer’s Agent, they may or may not be able to secure this information for you (it depends on what the seller and the Seller’s Agent want to reveal). Even if this information cannot be revealed to you, a friendly discussion with one of the neighbors may give you a feel for the situation.
Preparation
Just having the right information is not enough. You must prepare yourself in order to use it effectively. The most important factor in your preparation is your emotional frame of mind. Buying a house is emotionally charged enough, without adding to everything by letting your emotions override your common sense. It is not unusual to be excited–in fact, it is normal–but you must keep your excitement in check or you will lose the value of all the information you have gathered.
In addition to your emotional frame of mind, your financial frame of mind should be in order. An offer to purchase will carry a lot more weight if there are no dangling financial problems and if you have been pre-qualified for a mortgage.
Finally, plan your work and work your plan. Organize your information and have it quickly available. When it comes time to make an offer, you don’t want your “ammunition” scattered on scraps of paper in the back seat of your car. Again, familiarize yourself with offers and contracts, since this is how you will be negotiating.
Realism
Don’t throw away all of the information gathering and preparation you have done by making a strange offer on a well priced home. Nothing will turn a seller off more than a low ball offer on a house that has been realistically priced. Often, negotiations will stop, rarely to be revived again. If they are re-opened, the sellers generally will show their displeasure at the initial low offer by locking at or near the listing price.
Conclusion
All and all if you prepare your self, negotiation for your next home should come much easier.