The negotiation process can be difficult for both the buyer and the seller. While your real estate agent will do most of the negotiating for you, you are still responsible for telling your agent the terms you are willing to agree t. Therefore, it is important for you to have a good idea of the basics of negotiation. Here are the four key factors you need to know when negotiating a housing deal.
Key #1: The Market
The market place a big role in determining how you should go about negotiating a deal for a house. In a buyer’s market, the market favors the one who is doing the buying. Conversely, a seller’s market favors the person who is doing the selling. If inventory is high, it is generally considered a buyer’s market. If the number of available homes on the market is low, it is typically considered a seller’s market. If you are trying to purchase a home in a seller’s market, you are going to have less bargaining power than you would if you were trying to sell it in a buyer’s market. This is because the seller is likely to have plenty of other interested buyer offers to consider.
Key #2: Motivation
If the seller is in financial trouble or is otherwise desperate to sell the house quickly, the buyer has an advantage at the negotiating table. On the other hand, if the buyer is without a home and needs to move to a new area quickly because of a new job or for some other reason, the seller has the advantage. By understanding the motives of the person across the table, you are better able to determine the amount of leverage you have for negotiations.
Key #3: It’s Not Just About the Price
When negotationg a deal, be sure to consider more than just the price. If you are a buyer who is interested in two identical properties available for the same price, you can make one property a sweeter deal by negotiating extras. For example, you may ask that the seller pay the closing costs of that the seller complete some sort of update or repair before you purchase the home. In this case, you are actually getting a better deal on that home even if it has the same sale price as another home.
Key #4: Financing Options
The financing options available to the buyer will have an impact on how much the buyer is willing and able to pay for the house. When interest rates are down, sellers typically have a larger pool of buyers available to them because buyers are trying to take advantage of the low rates. Many sellers will also favor those buyers who have been pre-approved for a loan, so consider obtaining pre-approval before you begin the negotiation process. That way, you will have an extra bargaining chip in your favor.