There is something about buying a home which brings out the inner-negotiator in all of us.
It’s one of the few opportunities we might get in life to haggle over a large financial purchase. To play the give-and-take game and try to walk away with a win.
Sadly, the actual process often falls short of our bargain-securing expectations. In this article, I’ll explain the reasons why the real estate negotiation might not be everything you expected and provide tips for getting the right result in the end.
Firstly, don’t be too attached to the idea of going back and forth with the owner, because…
You may not even get the chance to negotiate
Sought-after houses often attract multiple offers. This can frustrate buyers who enter into the home-purchasing journey determined to flex their negotiation muscles, only to discover they are one of 3 offers being presented and they need to put their best foot forward from the outset.
So tip no.1 is to be ready to abandon your dreams of starting low and meeting in the middle if circumstances call for an all-out-leave-nothing-on-the-table approach.
If you find yourself in a competitive situation, take it as a promising sign that those other buyers like the same house as you.
Tips for the fortunate few…
If you are lucky enough to engage in one-on-one negotiations, then congratulations! You will likely have the opportunity to own this home if you want it. You are in the proverbial ‘box seat’.
Here are our tips to make the most of your strong position:
Expect the unexpected
When you get into a negotiation, the opposite side sometimes doesn’t respond the way you want or expect them to. Often, potential purchasers play the negotiation out in their heads before it’s actually happened. When the other party doesn’t play their part, frustration kicks in and the process stalls, with both parties determined not to move further until the other side plays ball.
Keep things moving, even if it’s with small changes
In our experience, most buyers and sellers give up negotiations too quickly, determined not to be taken advantage of. But in the real world, great deals are often concluded after many small moves over numerous days of back and forth. Keep things moving as long as you can, no matter how small your increase is, or how big you think the gap might still be.
It’s all about pride
When negotiations don’t reach a positive outcome, it’s often because pride got in the way, rather than money. Try to keep an open mind as you enter into the process and don’t pin yourself into a corner by talking in absolutes. Avoid using words like ‘we’ll never pay more than this’ because all you do is limit your options.
Stay patient, even when it’s driving you crazy
In most circumstances, buyers want negotiations concluded quickly, while owners like to take their time. If you have waited days for a response to your offer, stay calm. When you are buying a home, time is often your best friend. Owners don’t like to be rushed, especially when they have enjoyed a long tenure of the property. Give them space to consider their options and they may be more amenable to your terms.
Above all else, don’t lose the home you love
Fear of being taken advantage of rules most of our decisions during the real estate negotiation process and it’s easy to fall into the trap of believing the other side is being greedy or trying to mess you around.
In actual fact, what we usually see is two parties on either side who are both equally scared of making a bad decision.
Sadly, many good real estate deals are lost because buyers and sellers let their pride get in the way of progress. And the sticking point usually comes when they are so close it hurts.
So before you let a deal go, ask yourself: In ten years’ time, will you really care if you had to pay another $5k / $10k / $20k to own this home?
Are you ready to start looking?
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If you own a home already, you might need an appraisal to work out how much you’ll have to spend on your next home.