What is involved in a successful real estate negotiation?
Buying and selling real estate is more than a simple unemotional transfer of money and signing of documents. There is often an exchange of negotiation points that are important to all the parties involved. Knowing what is involved and how to successfully negotiate a sale will result in greater satisfaction to all parties.
Know your seller; know your buyer
Motivation for the sale is important to know. Does the seller need and want to sell? What is the reason? Is there a time factor involved?
What motivates the buyer? Does the buyer need and want to buy? Why did they choose your neighborhood over another? What is important to the buyer?
Case in point (seller): In a recent transaction, a property was put on the market by a family with a new baby. The mother had just been transferred to Valencia from Los Angeles, which meant being hours away from home and having a stressful commute. The buyer who could guarantee a quick close of escrow (under 30 days) was the one who was able to get this property, even though other offers were higher.
Case in point (buyer): A sale was lost because the owners refused to negotiate some small points that would have made the sale. The buyers wanted the appliances that were in the home, while the seller inexplicably refused to include them, even though the buyers gave a full price offer with few contingencies.
Study the comps
Your real estate agent will provide you with comparable sales. You will have a very good idea on what similar homes in the area have sold for and which homes never sold due to overpricing. There's really no good reason to overprice (or overpay) for a property when all parties have this information.
Don't expect to get a nice property for a low-ball price – it's just not going to happen. By the same token, no one is going to overpay for your house, when another down the street is lower.
Both sides should have options. What will you do if you can't get the price you want for your home? Will you lower the price? How much? How long are you willing to have your home on the market?
For the buyer, you should have other homes you are looking at. This is a tactical advantage since the seller will know you are also looking at other property. It also takes some of the pressure off of you as the buyer, to have more than one possible property in consideration.
The best negotiations involve personal meetings between parties. It's very advantageous to have your real estate agent meet with the buyer's real estate agent. A personal meeting will bring words, voice and your body language all into the equation, which is essential during negotiations.
The buyer agent will have spent countless hours with their clients, so they will be able to best represent the buyers and to clear up any misunderstandings. They will also present the buyer's qualifications and put the seller at ease about the transaction.
Believe it or not, electronic communication can sometimes be too impersonal. Sellers would like to know about the buyer who is moving into their home Buyers would like to know about the sellers and more about the community. Set up a personal meeting, it will make a difference.
Case in point: In a recent transaction, a house was on the market with two buyers. One buyer was a cash investor, who was going to "rent out the house to students." The other buyer was going to make it a family home and was looking forward to a big family gathering for Thanksgiving.
The all cash offer was for more, yet the owners took the buyer who wanted a family home. It was their home and they wanted another family to love it the way they did. This information got to the sellers via the personal meeting between the real estate agents.