Negotiating Tactics for Home Buyers
Poker faces aren’t just for playing poker!
You’re hoping to find a bargain in a home for sale as you search MLS listings, look at virtual home tours with lots of pictures, and check out “homes for sale” ads in newspapers and Homes magazines. There are a few things that will improve your chances of success.
You must realize that the market will have much to do with your being able to “get a great deal”. A “Buyer’s Market” is one where there is an over supply of homes for sale and that’s good for you. But a “Seller’s Market” is one where there is an under supply of homes for sale, allowing sellers to insist on getting the listed price or, sometimes, even more!
Now if you’ve looked hard and found only one home you’d like to have, you may want to go ahead and make a full price offer to make sure that home doesn’t get away. But let’s assume there is a normal balance of buyers and homes for sale and you will be able to find more than one home that will suit your needs. Then, you’re in a position of being able to negotiate.
So, here are some suggestions concerning offers and counter-offers:
* When you see a home you really like, keep it to yourself. Not only do you not want the seller or the seller’s agent to know how much you want the house, but don’t even tell your own agent!
* Don’t share how much you are willing to pay with anyone, including your agent. Ask for their opinion, get a comparative market analysis, but even if you have a buyer’s agent, don’t confide in them when it comes to your price and strategy. While they may not knowingly “sell you out”, words slip and feelings and attitudes show. Play it close to the vest.
* With serious thought, arrive at your “top price” - the most you would be willing to pay. Then you need to arrive at a “target price”, what you think you should be able to buy the house for. If that’s more than your top price, your top price becomes your target price.
* Now, after determining the difference between your target price and the asking price you can arrive at your original offer. It should be an amount that will allow you to give more that half of that difference before reaching your target price.
* If and when the time comes for you to make counter offers, and it appears several will be necessary, your first concession should be larger than subsequent ones, giving the seller a signal that they may be getting close to losing the sale.
* Consider ways you might compensate the seller without giving them more money. You might let them stay in the house some extra time after the closing, or lend them your truck to move, or give them a week in your time-share, etc.
* If you reach your limit, don’t announce “it’s my final offer” - that can be offensive. If you then get another counter offer, just go back with your same last offer. Explain, as nicely as possible, it is the very best you can do and you hope the seller will reconsider.
* Your very best negotiating tactic is to make sure your agent knows you are prepared to walk away. They will convey this to the seller’s agent who will then tell the seller.
So remember, just like in poker, play your cards close to the vest!