Negotiation is a subtle art in real estate. Skilled negotiators can usually find some common ground that satisfies all parties. On the other hand, using the wrong negotiation tactics can sink a deal pretty quickly. Here are some negotiation tactics buyers (and real estate professionals) 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. If you’re not even approaching the low end of that range, they probably won’t consider the offer.
This is a great opportunity to do two things:
First, ask your agent to give his opinion on what the fair market value is of the home. He’s visited hundreds of properties. If he’s experienced, He can provide a pretty accurate range just by having visited the property. Does the property have any odd characteristics to take into consideration? If so, he might want to go back to the office first and do some research to give you the most accurate fair market value. (And let’s be real, who would argue with someone wanting to do research on their behalf?)
And second, know what you would be willing to pay for the property. If your “highest and best” offer is vastly lower than the fair market value but you’re in love with the property, it can’t hurt to ask. Just keep in mind that this isn’t a negotiation tactic, it’s a hail mary!
On the other hand, if you would be willing to pay close to or in the range of the fair market value BUT you want to see how low you can get the seller to come down in price, this is a terrible plan and the quickest way to get written off. Work with your realtor to find a realistic number that will encourage the seller to engage with you and you’re much more likely to come to an agreed-upon number both you and the seller are happy with!
Incremental negotiation
Don’t continue to go back to the seller with small increases in your offer ($1,000 or less). The constant back-and-forth can grow tiresome and lead the seller to consider other opportunities.
It’s extremely helpful in these moments to have decided before beginning negotiations what the highest amount is you would be willing to pay for the house without regretting it later. Don’t push just to push or it may come back to bite you later. (More on that soon.)
“Take it or leave it”
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
Obviously, if the 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.
Repair requests typically focus on health and safety issues.
Depending on the issue, you can also ask for fixes on anything that would be costly to repair. Keep in mind that if the seller doesn’t have to fix the issue to sell the house they won’t be inclined to say yes to an extensive list of demands.
Another thing to keep in mind is how hard you’ve pushed the seller on the purchase price. Have they already hit their rock-bottom in the negotiations on the purchase price? If so, you’ll have a difficult time getting them to agree to much in the way of repairs.
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.
A good negotiator knows how to pick and choose the important battles, leaving the other party to “win” at things that don’t matter to them.
Now that you know what to avoid, you can use this information to help you get the best deal possible on your future home. In the end, you’ll likely save time and money. Focus on your key issues and negotiate wisely! Ready to get started?
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