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Home
Buying Negotiations
The art of negotiation for buying a home is exactly
that, an art. It takes a keen understanding of the process in order to be
good at it--and before you begin making
offers
on homes.
When it comes to Real Estate matters, the 3 most important aspects of an
effective negotiation are:
| 1) Information |
| 2) Preparation |
| 3) Realism |
Being a good negotiator does not come
naturally to most people--it must be worked at--is the first step in
becoming one.
Information
CMA's--Comparable Market Analyses
Once you have found a home that you are prepared to
buy, the first step in your process of negotiation is to determine a fair
value of the home. Your Parkland Properties of Distinction Agent can be of great help. Real Estate
Agents have access to the information that you need with a
Comparable Market Analyses (CMAs).
A CMA will show exactly what properties similar to the one in which you have
an interest have sold for. These analyses are based on fact, rather than
opinion, and that information will always be of more value to you. The CMA
which you obtain will most likely give you some general information about
the houses that will be compared: Number of bedrooms and baths, square
footage, the listing price and the sold price. It is important that the CMA
focuses on houses similar to the one you have selected. If you are
interested in a 4 bedroom, 2 1/2 bath 2 story, a CMA that lists only 3
bedroom 1 bath homes is of little or no value. Likewise, a CMA that includes
a number of properties from a neighborhood 2 miles away will have limited
value. To have a good CMA you must have all of the similar sales in the
neighborhood in the last year. Obviously, the fresher the data (the more
houses sold in the last few months), the better the CMA.
Condition
Once you have the information in hand, it is important
to drive by all of the properties that are listed to see the condition, this
has much to do with the ultimate selling price of a house. Does the home in
which you are interested shine above or fall below the others that have
sold. Size, number of rooms, and lot size can only tell you a lot.
Motivation
An effective negotiator will gather as much
information as is available on the house and the sellers. Obviously, one of
the most important pieces of information you can have is the seller's reason
for selling. Is it a case of having to sell or wanting to
sell? If your Agent represents you in the transaction as a Buyer's Agent,
they may or may not be able to secure this information for you (it depends
on what the seller and the Seller's Agent want to reveal). Even if this
information cannot be revealed to you, a friendly discussion with one of the
neighbors may give you a feel for the situation.
Preparation
Just having the right information is not enough. You
must prepare yourself in order to use it effectively. The most important
factor in your preparation is your emotional frame of mind. Buying a house
is emotionally charged enough, without adding to everything by
letting your emotions override your common sense. It is not unusual to be
excited--in fact, it is normal--but you must keep your excitement in check
or you will lose the value of all the information you have gathered.
In addition to your emotional frame of mind, your financial
frame of mind should be in order. An offer to purchase will carry a lot more
weight if there are no dangling
financial
problems and if you have been pre-qualified for a mortgage.
Finally, plan your work and work your plan. Organize your information and
have it quickly available. When it comes time to make an offer, you don't
want your "ammunition" scattered on scraps of paper in the back seat of your
car. Again, familiarize yourself with offers
and contracts,
since this is how you will be negotiating.
Realism
Don't throw away all of the information gathering and preparation you
have done by making a strange offer on a well priced home. Nothing will
turn a seller off more than a low ball offer on a house that has been
realistically priced. Often, negotiations will stop, rarely to be revived
again. If they are re-opened, the sellers generally will show their
displeasure at the initial low offer by locking at or near the listing
price.
Conclusion
All and all if you prepare your self, negotiation for your next home
should come much easier.
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