This likely comes as no surprise: The real estate market is strongly favoring home sellers over buyers these days.
But time, tide, and home mortgages wait for no one; so if you’re at the stage where you’re making offers on properties, the following ten tips will help you develop a winning negotiation strategy when dealing with home sellers.
LOOK FOR MOTIVATED SELLERS
Ask your Realtor to be on the lookout for sellers who need to move fast, whether it’s out-of-state for a new job, downsizing into a smaller home, or any number of other reasons.
If you can accommodate their schedule, that gives you a leg up on the competition and provides some room to talk terms.
SEARCH FOR UNEQUAL VALUE
Does a seller need a quick close? Or want to stay in the house an extra month? What about a guarantee the trees they planted 20 years ago won’t be cut down?
If these things aren’t as important to you as they are to the owner, you now have terms to offer that others may not be able to match.
Invariably, in any negotiation, there is at least one thing one side values that the other side doesn’t. Find out what it is, and you may have a new home sooner than later.
KNOW YOUR NUMBERS
It’s crucial you know what your maximum offer is, the true market value of any home you’re considering, how many repairs it’ll need, etc.
Vague guesstimates will weaken your position and cost you time and money before and even after you buy a home.
DON’T DAWDLE OR LINGER
If the sellers says “Yes,” have a purchase agreement ready to sign and settle on a date to formally close.
If the seller says “No,” ask if you can call them again in a couple of weeks to check if they’ve sold the house or are more willing to consider your offer. And then move on to the next house on your list.
Inventory is scarce, competition is plenty, and prices are still climbing. You cannot afford—literally—to wait too long for any one particular house.
ALWAYS HAVE OPTIONS
Let the seller know you’re looking at other properties and not putting all of your eggs in their basket. Even in a hot market, sellers don’t like the idea of their home going unsold for too long.
Knowing you have other options may make them more amenable to at least some of your terms.
PRE-APPROVAL IS CRUCIAL
If you can’t make a cash offer, having a mortgage pre-approval (not just a pre-qualification) gives you leverage. It may also set you apart from other buyers.
And make sure you have a pre-approval for a specific property’s price. If it’s going for $300,000, and you hand them proof you can afford $400,000, you’re practically begging them to raise their price.
NIX THE LOW-BALL
Unless you’re specifically after a foreclosure or the selling price is ridiculously high, a low-ball offer will almost always turn the seller against you.
MUMS THE WORD
If you hate the wallpaper, the sconces—pretty much anything—it’s best to keep those thoughts to yourself.
For all you know, the wallpaper represents one of the owner’s fondest memories, and if you make your distaste public, you may have opined yourself out of a home.
INFORMATION IS POWER
Do you have any friends in common? Hobbies? Did you go to the same college? Are your kids into the same sports? The more you can find out about the seller, the more you’ll feel less like an impersonal buyer and more like a friend.
Please note, however, this is not an excuse to try and take advantage of anyone. As any buyer can tell you, spotting over-agreeableness is not that hard. But a little friendliness and commonality can go a long way. Maybe enough to give you a quick close, or let you keep the new refrigerator that was installed last year.
And even if this tactic doesn’t appeal to you, don’t be afraid to let the sellers learn about you—your job, your family, etc.
Some sellers are only focused on the money, but others want to know that their property—their home—is going to someone who will love it as much as they did, and not strip mine it and throw up a McMansion.
The Overall Strategy
In his book, Getting More, master negotiator Stuart Diamond talks about knowing the “…pictures in [people’s] heads. Their perceptions, sensibilities, needs, etc.”
By learning which picture is in their seller’s head, you’ll be better positioned to make them the stereotypical “un-refusable offer”.
Want to learn more tips for negotiating with home sellers? Answer a few questions here, and a home lending expert will contact you.