- Know Your Market: Let's face it, in order to get the very best deal possible, you need to know what market value is. There are a number of ways to gain information, but the savvy buyer knows that an experienced professional agent is going to provide the best market expertise. They will be able to identify what market value is and then negotiate to beat the market.
- Present Your Knowledge To The Seller: Negotiating begins with a nice clean presentation of an offer. Putting in an offer without any kind of "set-up" is going to leave you with limited leverage in the negotiation, and might create the perception that you are a shark trying to take advantage of a seller. A powerful offer presentation will tell your story and humanize you to the seller, which may allow them to be more flexible for you, but not your competition.
- Let Them Know You Love The Home...but: In order to negotiate the best price, you have to bring the seller back to reality. The seller already knows you like the property, because you put an offer in. Its imperative to find a way to remind them of the property's shortcomings or limitations, but make it known that you are willing to overlook them as long as the value makes sense. The seller should recognize that you are buying a property that you like, but that it has to make financial sense.
- It Starts With The Presentation: When you set up the offer with a powerful presentation, you laid the groundwork for the seller to make some concessions on things that may need to be updated, upgraded, repaired, or replaced. In the hot West Michigan market of 2015-15, "elective" updates may not be considered by a seller, but repairs often are, as the seller realizes the next buyer to come along may require the same repair.
- Changes vs Cash Back: Once you are close to where you want to be financially in the deal, you can refer back to those items. Most sellers know there are things that not every buyer is going to like about the home. Sellers that stop negotiating on price may be willing to move more on repairs, etc, that they know could come up with the next buyer if you move on.
3. CLOSING COSTS
- The Surefire Price Reduction: Sellers are often not surprised when a buyer asks for closing costs, though in our recent hot market, they can be hard to secure. Similar to concessions for repairs, closing costs offer a good avenue for a savvy buyer to negotiate a better price, by minimizing the cash they need to bring to closing.
- Know the Guidelines and Limits: It's important to know lending rules. There are limits to the amounts of concessions you can receive based on your loan type. If your agent can't educate you on these limits, a good loan officer will be able to.
- The Biggest Closing Cost Mistake: When presenting a cash offer, avoid asking for closing costs. Some would argue that it creates a perception for the seller of receiving a higher price, but, the seller is really just concerned with how much they are going to net.
A great negotiator can assist you in buying under market value in many cases. A poor negotiator can cost you thousands!