Whether you're looking to buy your dream home or sell a cherished property, effective negotiation is an art and a science that can significantly influence the outcome. This comprehensive guide will explore strategies and tactics to help you walk away from the negotiation table with a win-win deal.
Fast facts about real estate negotiation
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In a National Association of Realtors survey, 12% of prospective homebuyers expressed that they primarily sought negotiation assistance from their real estate agents.
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Nearly half of buyers’ real estate agents contributed to better contract terms and increased their familiarity with prospective neighborhoods.
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In recent research, 95% of home sellers stated that buyers requested a home inspection.
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A total of 67% of home sellers ended up negotiating repair-related issues following the inspection results.
Strategies for negotiating in real estate
Let the other side go first
Often, it's best to let the other party reveal their hand first. Doing so gives you invaluable information about their position, their desires, and how they value the real estate deal at hand. For example, if you're a buyer, allowing the seller to state their asking price can provide you with a better idea of what to offer or whether you can expect any flexibility on the sales price.
Leverage included items
Real estate negotiations go beyond just the purchase price. You can also negotiate for appliances, furniture, or even a home warranty. By including these items in your negotiation process, you can potentially add value to your transaction without significantly affecting the total sale price. For instance, if a seller refuses to lower their asking price, you may be able to get them to cover closing costs or include valuable appliances.
Use words that affirm
The negotiation table is a place where words matter, and choosing the right ones can significantly influence the emotional process of the deal. Using affirming language can help foster a collaborative atmosphere. This approach increases the likelihood of both the buyer and the seller walking away feeling like they’ve secured the best deal.
The role of body language and facial expressions
Your body language and facial expressions send powerful messages during real estate negotiations. Maintaining eye contact, offering a genuine smile, or adopting a relaxed posture can convey confidence and trustworthiness. These nonverbal cues can go a long way in aiding a successful negotiation.
Begin with a price close to market value
When you place your initial offer close to the market value, you indicate to the other party that you are serious and well-informed. In a buyer's market, this could mean having the upper hand in negotiating down the price. In a seller's market, an offer close to the market value could ensure you are not quickly outbid.
Do your homework
Research is vital in any real estate transaction. Knowing the local market conditions, recent sales, and even the other party’s motives can give you a competitive advantage. Prospective buyers and sellers should consult with a local real estate agent who can provide invaluable insights into the current market.
Keep emotions in check and remain optimistic
Real estate negotiations can be an emotional rollercoaster. Whether it's the homebuying process or trying to get the best price for your investment property, emotions can cloud your judgment. It’s important to stay positive and controlled, which makes it easier to stick to your negotiation strategy and avoid a bad deal.
Opt for face-to-face or phone conversations
In an age of digital communication, the value of face-to-face or phone interactions should not be underestimated. Personal meetings allow for a richer exchange of information and a better understanding of the other party's emotional investment in the negotiation process. This can lead to a more successful outcome.
Always have an alternative option
Having a backup plan is crucial. A backup plan can increase your negotiating power, whether it's another property you're willing to buy or other prospective buyers you can approach. It offers you the freedom to walk away from a negotiation table if things aren't going in your favor.
Recognize when it’s time to step away
Negotiation strategies are about securing the best possible outcome, but sometimes, no deal is better than a bad one. Knowing when to say "no" and walk away is as important as knowing how to forge a deal. A real estate negotiation expert will always tell you that the ability to decline is a strategic tool that can be just as powerful as any other in your arsenal.
Items that are up for discussion in a real estate transaction
Home pricing
The sales price is often the most talked-about element in real estate negotiations, but it’s just one of many factors that can be negotiated.
Costs at closing
Closing costs are another significant financial aspect that both the buyer and the seller can negotiate. From appraisal fees to down payment percentages, these costs can be adjusted to create a win-win situation for both parties.
The date of closing
The closing date is not set in stone and can be shifted according to the buyer’s or seller’s needs. This flexibility can sometimes make or break a deal.
Home repair expenses
From minor touch-ups to significant repairs, the condition of the property can be a significant negotiation point. The findings of the inspection report can offer room for negotiation on repair costs or even a lower home price.
Appliances in the home
Including or excluding appliances in the home sale can be a negotiation tactic used by both the buyer and the seller to reach a favorable agreement.
Included furniture
Sometimes, furniture can be part of a real estate deal. Sellers might be willing to include furniture to sweeten the deal, while buyers could use it as a negotiation point to reduce the purchase price.
About Adrien Bellagio
Adrien Bellagio has spent over a decade mastering the intricacies of both residential and commercial real estate in the Chicago area. If you're looking to buy or sell a home or have any questions about the Illinois real estate market, contact Adrien Bellagio today.
