Negotiation is a big part of real estate, after all, the perfect house at the perfect price doesn’t normally appear on its own. Negotiations can usually help establish common ground amongst all parties. It is important to understand what to do and what not to do so you don’t ruin the transaction. Before you begin, make sure you understand the market comparables and be realistic about what is fair and reasonable in the area.
No matter how tempting they may be, here are some negotiation tactics Buyers should avoid:
- Lowball Offers: Going far below market value when you make an offer damages your credibility as a Buyer and can be insulting to the Seller. The Seller has a range in mind that they’ll accept, and if you’re not even approaching the low end of that range, they won’t even consider the offer. Furthermore, you aren’t going to change their mindset simply by offering less. Instead, look at the sales price, market comparables and what repairs you think are required for the home. Then you can make an offer that is fair to both parties.
- Incremental Negotiations: Don’t go back to the seller with small increases in your offer ($1,000 or less). The constant back-and-forth can grow tiresome, create frustration and ultimately lead the Seller to consider other Buyers.
- The Initial Ultimatum: Try not to draw a line in the sand with your initial offer. The Seller can get defensive and consider other offers if you immediately show that you’re unwilling to budge. Even if it’s true, don’t make a show of it.
- Nitpicking After Inspection: Don’t agree on a sales price with the intention of lowering the price or getting money back during your request for repairs. Obviously, if an inspection reveals a major issue, it should be factored into the final sale price. But insisting on a lower price for every minor repair can put negotiations in a stalemate. As a rule of thumb, any issues that appear on reports classified as Section 1 (insect or fungal infections to the property) or are deemed safety hazards should be repaired prior to closing. It is important to realize that most inspectors are going to make recommendations to any home, even new construction, but that doesn’t mean the responsibility falls on the Seller. If either party is unable to come to an agreement regarding repairs, they can decide to abandon the deal, wasting everyone’s time and money.
- Asking For More, More, More: Some Buyers will request that the sellers throw in add-ons like furniture or appliances that weren’t included in the listing. Try to avoid giving the Seller a reason to build up resentment and think that you’re being greedy. You can always ask to purchase items from the Seller, but it should be separate from the home sale.
As in any negotiation, it is important to remember that both parties are working towards the same goal. Leading with a mindset of creating a win-win situation will foster a more positive transaction experience for everyone involved. Listen to what the Seller is looking for and what is important to them, negotiate from there to find common ground. Ask your Realtor for advice as they have been through countless negotiations and are well versed in what works and doesn’t work.
Contact Arrive Real Estate Group to learn more about the home buying process, our negotiation skills and how we can help find your dream home!