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Real estate negotiations are like any other sale negotiation – except there’s a few hundred thousand dollars at play – no biggie…
Yes, there is a certain amount of strategy involved, but what happens if you’re not the ruthless, pit-bull negotiator who knows exactly how to arrive at your intended price? Don’t lose hope, because real estate negotiations are just as much about sense as they are about skill. Here’s our top six tips to get you bargaining like a pro.
1. Knowledge is power
Research, research, research. Finding out as much information about the property and relevant market comparisons is one of the most powerful tools to take into a negotiation. The more you know, the better you can play. The best way to find out if the listing price is close to the mark is to get on realestate.com, filter your property specifics, and check out similar properties under the ‘sold’ tab. Knowing what other properties are listed for is not as important as knowing what they sold for, as only the sale price is an accurate reflection of true market value.
2. Use your manners
Manners will get you far in life, and the same is true for real estate negotiations. Having a tactical negotiation approach is not an excuse for rude behaviour, nor is it a substitute for common courtesy. Being aggressive and confrontational will not assert your dominance, it will just make you appear difficult and will put people off wanting to meet you in the middle. Negotiations that are polite and mutually respectful often produce the best outcomes.
3. Make a respectable offer
Speaking of respectful, let’s start with the offer. If the property for sale is priced according to true market value, making a low-ball offer will be pretty insulting and immediately put the negotiation in slippery territory. On average, most properties sell for about 3-5% less than the listing price, so making an offer reduced by more than 10% is probably going to be declined. Making a respectable offer tells the vendor you really like the property and are prepared to enter into serious negotiations, whereas low-ballers are generally viewed as ‘bargain hunters’ and will not likely hold much power in a prospective deal.
4. Back it up
From a vendor’s perspective, negotiations require just as much work. It’s your job to convince a buyer why the property is worth the asking price, and for this, you need evidence. Showing proof of value can be achieved through similar property sales in the area, recent renovations or charming features, or any other factors that add unique value to the property. At the end of the day, your property is only worth what someone is willing to pay for it, so you need to be reasonable and logical with your sale price expectations.
5. Put it in writing
If you’re serious about your offer, put it in writing. A written contract holds much more weight than a verbal arrangement, and it tells the vendor that you mean business. It can be hard to decline an offer as confident and compelling as one in writing, so put it all on the table and go for it if you know that’s what you want. This is also a great strategy for nudging in front of your potential competition.
6. Check your emotions
Falling completely in love with a property is both the best and worst thing to do. You need to love the property enough to want to buy it, but abandoning all common sense for your affinity with the house is dangerous ground. Letting a vendor know how much you love the house and want to buy it can work against you in negotiations. To keep the upper hand, you need to hold your cards close to your chest, which means checking your emotions at the door. Know your budget limits and stick to them. If the price isn’t right, walk away.
Effective real estate negotiations really come down to staying firm and resolute in your budget, and having confidence to back yourself when throwing a deal on the table. Don’t be too aggressive, but don’t be vague and flaky either; just be calm, be confident, and know that with the right attitude, you will have those shiny new keys in your hand all in due time.