It takes a keen understanding of the home buying process to be good at negotiating. Be sure you have it down before you make any offers on homes. Especially, with the market heating up for Summer. Or better yet, rely on your real estate agent to do the negotiating for you, but you should always be part of the process. Realtors are professionals in the housing market and have the best tools for you to use when looking for a new home. Here are some tools and information the best negotiators use:
CMAs – Comparable Market Analysis
Once you’ve found a home you want to buy, the first step in negotiation is to assess the fair value. CMAs show what similar properties in the area have sold for. Your real state agent will have access to CMAs and can share them with you.
Generally, CMAs list houses in a particular location that are currently on the market, have sales pending, have expired from the market, or have sold. It is the “sold” properties you need to look at because the list price and the offer aren’t necessarily the best indicators of what the house will sell for. There can be a big discrepancy between those two figures.
The CMA often gives you general information about the houses being compared: number of bedrooms and baths, square footage, the listing price and the sold price. Make sure you focus on houses similar to the one you’ve selected – both in description and location. The more recent the data, the better.
Once you have the CMA, drive by all of the properties listed in the sold column. Condition has a lot to do with the ultimate selling prices of a house. Does the home in which you’re interested shine above or fall below those sold? Make a realistic comparison of condition and discuss with your realtor, then adjust your thinking up or down according to what you see.
Does the house you’ve chosen have more or fewer amenities than comparable homes? Although amenities won’t affect the value as much as location or overall condition, they can be a factor. Be wary, though. An outdoor hot tub, for example, may have been a major motivating factor in your choice of a house, but it won’t add much to the value of the property when you resell.
A good negotiator gathers as much information as possible on the house and the sellers. The owner’s reason for selling is at the top of the list. Does he or she have to sell? Want to sell? Just throwing in on the market at a high price to see if it’ll move? If your agent representing you in the transaction is a buyer’s agent, they can try to secure this information for you. If you’re working with an agent representing the seller, they typically can’t disclose this information without the seller’s consent.
Great negotiators always prepare themselves. The most important factor is your frame of mind. Never let emotions override common sense during negotiations. Set a realistic limit and stick to it. If the price isn’t to your liking or is outside your budget, you must always be willing to walk away. In addition to your emotional frame of mind, your finances should be in order. An offer carries more weight if there are no dangling financial problems and if you’re pre-approved for a mortgage.
Make a realistic offer. Nothing offends a seller more than a low-ball offer on a house that is fairly priced. Often, negotiations will stop, rarely to be revived again.
Call us today to get pre-qualified so you are prepared to negotiate on a home!