The Most Effective Tool in Real Estate Negotiation
Negotiating the buying or selling of a home is a complex matter. Every transaction is unique, and each situation brings with it a laundry list of unknowns that are difficult to prepare for. And let’s be honest, negotiating is not easy. For many people it’s downright unpleasant!
Real Estate Negotiations can be Complex and Time Consuming
Between work, family, packing, calling the movers, calling to check on your loan, and everything else in your busy life, do you really have the time, energy or even the resources to negotiate a real estate deal? And what happens when a negotiation war ensues?
There are various tools, such as webinars and blogs, which can help you negotiate a real estate sale, or you can spend hours upon hours trying to educate yourself. Yet the most effective tool in real estate negotiation actually is quite simple: a licensed REALTOR®.
A REALTOR® is Your Best Resource for Real Estate Negotiations
REALTORS® understand that the “art of negotiation” is not just a simple isolated exchange, but rather a continuing effort. Every action that you take during the entire transaction beginning with the submittal of an offer to close of escrow is part of this negotiation.
A REALTOR® representing you as a buyer’s agent will coach you about the best way to position yourself and your offer to increase the likelihood of the seller’s acceptance. This is true even in a strong buyer’s market. A REALTOR® will assist you with all the terms of your offer, including the price; to be sure your offer is as attractive to the seller as possible.
This includes a conditional loan approval from a reputable lender, timeframe for close of escrow, use of qualified inspectors, amount and type of earnest money deposit, contingencies and how they are structured, comparative analysis of the property, and attention to detail in the offer.
What details could be in an offer? Consider two identical properties that each sell on the same day for $275,000. The houses are the same, the sale prices are the same, but are the deals the same? Probably not.
For instance, the offer on the first property may have been a cash deal that will close quickly. Perhaps the offer on the second property includes some concessions from the seller such as closing costs and a closing date that is three months away. Even though the houses were identical and sold for the same price, the deals may be drastically different. In each instance, the buyer’s agent negotiated the deal carefully to get the best outcome for their client.
And the same is true on the seller’s side of the deal. A seller’s agent will negotiate to get the best deal for their client. An experienced selling agent may have negotiated hundreds of home purchases. REALTORS® know the strength of the market and what’s driving demand, which gives them an advantage by knowing what terms are worth negotiating for and which are worth letting the other party win. A REALTOR® can also detect the warning signs of a nervous or disingenuous buyer.
Besides the attention to detail, the basis for a successful negotiation is knowledge. Don’t guess or make assumptions. REALTORS® provide the basic information you should have before you start negotiating on a property such as:
- MLS printouts – if the property is listed, read and understand all of the data.
- Listing brochure – will include more details about the property.
- Listing history – has the property been previously listed? How long on the market? Has the price been reduced? When and how much?
- Neighborhood sales & listings (often referred to as “comparables” or “comps”) – study the recent listings and sales in the neighborhood to see how similar the data are to the home you are selling or the home you are purchasing.
- Statistical market data – what is the “big picture” of the current market? In a stagnant or falling market, time is on your side if you are buying but will work against a seller. Understand the leading statistics such as “months of inventory remaining” and “absorption rate”.
- Public records information – this includes the basic property details used by the city property tax assessor’s office.
- Ownership data – is the seller a foreign corporation, mainland investor, or owner-occupant, a bank, private trust or charitable organization?
- Conveyance history – when was the property last sold and for how much?
- Mortgages and liens – do they exceed the value of the property and if so, how will they be paid off?
When negotiating, REALTORS® know how to structure the offer for acceptance, use personal communication as a tool, and to negotiate with data, not opinion.
So when you’re ready to buy or sell a home call a member of the Akron Cleveland Association of REALTORS®. Please call at (330) 434-6677 (Akron) or (216) 901-0130 (Independence).