You’ve done your homework.
You met with a realtor, budgeted out your financial limits with a lender, and discussed what you are looking for in a house. Three, maybe four, bedrooms and a master bathroom with a double sink. Plus, a cozy backyard that allows you to enjoy the outdoors at home, but not so large that it overwhelms you during the growing season.
You feel ready to start looking for that next home.
But, there’s still that slight hesitation when it comes to one thing: negotiation.
Real estate reality television shows do a wonderful job at dramatizing negotiations for multi-million dollar houses and luxurious properties. They make sure to build up the tension between the buyer and seller, with cutthroat negotiations that would make Mark Cuban sweat with anticipation.
So, of course, it’s normal to feel some anxiety when it comes to this part of the real estate buying and selling process. We get it.
That’s why we’ve come up with these 9 tips to boost your confidence in real estate negotiations.
Because even though we can’t prepare for every situation in a negotiation, we can feel confident and grounded in ourselves to make a deal that puts our minds at ease.
Investigate the Market
What types of properties are selling in your desired market? Are they going over or under the asking price? What’s the average time a home spends on the market before being sold?
You’ll need to answer these types of questions ahead of time, or ask them of your realtor, in order to gain more confidence for eventual negotiations.
For example, if you’re putting in an offer on a home that has stayed on the market longer than the average time in that area, you could get away with a lower offer than the asking price. Having the background knowledge of your ideal area puts you ahead of the competition, with the ability to adjust your negotiating tactics with added information.
With Orange County proving more competitive than most markets, you need to be prepared to put your best foot forward.
Get Clear on What You Need
Without nailing down exactly what you need in your dream home, you can feel stuck and unsure if the deal in front of you will prove the best.
Are you willing to purchase a home that needs renovations or added cosmetic work? What about a ready-to-move-in home that lists above your budget? How will you handle these situations without knowing what is a deal breaker, and what is absolutely necessary?
Not only that, but a list of your wants and needs will result in a more refined search for that perfect home, leading to quicker, painless negotiations.
Set a Firm Budget
Of course, you have to know your limit for a purchase price as a buyer and a minimum selling price if we’re on the other side of the table.
But setting a budget doesn’t just stop at the list price.
How much of a monthly mortgage payment can we afford? What about setting aside money for closing costs, environmental assessments, and contingencies?
A solid real estate agent will walk you through the budgeting process in fine detail, but understanding these financial hurdles ahead of time will raise your confidence level and lead to a more successful negotiation.
Do Your Homework on the Seller
Why is the owner selling the home?
Knowing the answer to this question can be crucial in your negotiation process.
If the seller needs to move quickly, there’s an opportunity to save some money in return for a smoother sales process. If the homeowner merely wants to see what sort of offers they receive out in the market to gauge their home value, you might not be able to get them to budge off the asking price.
Owners of investment properties may be less likely to make sentimental decisions as well, so save the homebuyer’s letter to the seller for another house.
Gauge the Competition
Do your best to get to know the buyer’s agent of the home you fall in love with.
Why?
They can be an invaluable resource into learning how many offers might already be on the table, if there’s an offer deadline, and if anyone has met the asking price thus far.
Especially in Orange County, homes that check a lot of boxes for buyers move fast, and we need to be prepared to strike quickly when things heat up, or stay patient when a home stalls on the market.
Know What is Negotiable
The negotiations over the final price are just the beginning.
Buyers can request property sellers to cover closing costs, home repairs can be requested, and sellers can include furniture and appliances to raise the value of the home overall.
You can even negotiate further after final inspections are completed if different issues arise. There are plenty of opportunities to find the best deal and a knowledgeable real estate agent will help you find them along the way.
Try to Create a Bidding War
But the power in negotiation doesn’t always lie with the buyer. Sellers can be in the driver’s seat too with the right situation and knowledge of the market.
If you follow a few steps to generate multiple offers on a home, interested buyers will have less opportunities to keep you from receiving your asking price.
Negotiate Counteroffers
Let’s say you put in an offer on a home below its asking price. The seller then returns with a counteroffer for below that asking price, but above the one you offered. What next?
Take that green light for further negotiations and see if you can meet further in the middle.
However, if a seller returns to you with their same asking price, it could be an indication they are not willing to budge and you need to assess altering your offer.
Just know that negotiations don’t simply end once you receive a counter offer. We almost always have an opportunity to continue the conversation.
Be Ready to Walk Away
Sometimes, the deal doesn’t make sense for us. Whether the price is too high, the seller won’t pay for needed repairs, or the buyer isn’t able to put forth more cash up front, we have to know when to walk away.
Not every offer will be our final offer, nor will that perfect house be the only one we can find that meets our needs.
As competitive as Orange County can be, there are so many opportunities and resources at our disposal that we can always find a solution to finding your dream home or selling at your ideal price.
By understanding a few of these negotiation tips, we are more prepared to negotiate with confidence and conviction. And hey, we won’t mind if you watch an episode or two of Million Dollar Listing to put your mind at ease if needed.
