Some people love negotiating and others hate it. Regardless of which side of the sold sign you fall on, the best possible deal is what both buyer and seller want. Arriving at that price can be a lesson in frustration or even cause a complete shut-out.
So what’s the X factor? In real estate, many buyers will shop around, find the home they really like, and then, rather than make an offer based on the value of the home to them (taking into consideration comp prices too), they’ll say, “How much less should we offer off the asking price?” That’s the X factor.
It’s as though there’s a magical X percentage that should automatically come off the listing price, regardless of what the asking price is. Many times the home is priced realistically––right in line with the comps. Buyers still want a deal and may want to start with a low-ball offer. Doing this can slow the process and not necessarily result in the outcome the buyer wants–the seller, feeling insulted, may halt any negotiation. If you’re a serious buyer looking to purchase a home, it’s a good idea to really heed the comps, and consider the value of the home to you–especially if the home you found meets your needs and desires.
Arriving at a purchase price for a home is very personal. What one buyer would pay, another might not for the very same home. Of course, there are appraisals to make sure that the home’s price is in line with how much the bank is willing to lend the buyers. But the buyers’ needs, the home’s location, amenities, and its overall appeal, significantly factor into its value. On the other side, the need to sell, the timeline, and the pressures of needing the money out of the home to purchase another property affect the sellers’ decision to accept an offer.
All kinds of negotiations begin when it comes to buying a home. Art, drapes, dishes, timelines… many different things are thrown into the negotiating process. If there’s something you absolutely must have, of course, negotiate to get it. Just understand that negotiation means compromise, so both sides will give a little and ideally both sides will win–not by a winner takes all stance but rather by each side getting their specific needs met through a compromise process.
If as a buyer you have a list of your top priorities jotted down before the process begins, it will be easier to keep them straight and ensure that those items are secured when the negotiating begins. Then, if suddenly, a non-top priority pops up and is causing the process to stall or come to a halt, you can re-evaluate your top priorities to see if this is truly a must-have or if, perhaps, you’ve fallen into the “winner must-take all” syndrome of negotiating. A lot of times emotions get ignited and sometimes the negotiation process becomes more about winning than really getting what the party needs or wants. In the end, that will create an unsatisfactory sale or no sale at all.
Meeting in the middle can often be a good tool for buyers and sellers who can’t come to an agreement on things like who will pay for the recording fee or certain cosmetic repairs. Splitting the costs can be less expensive than haggling for weeks, losing time, money, and maybe even the deal.
If you reach a really sticking point in negotiations, table it for a bit. Move on to other negotiations and see how many areas there are that both parties can come to agreement. Often the issue that was holding things up will then appear in a different light to both buyer and seller once the bigger items are resolved.
Published: December 17, 2010 by Phoebe Chongchua