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Some people are born negotiators. But, not everyone feels comfortable negotiating. For some, it smacks of haggling, which has a negative connotation.
Negotiating can be particularly tricky when it involves a home purchase. Home buying has an emotional component that is lacking in other business transactions. This is understandable because it involves the place you'll call home. The trick is to keep your emotions from dictating your negotiating posture.
You'll be better able to maintain control of your emotions if you do your homework before you start the negotiation process.
First, get your finances in order. If you need a mortgage to complete the purchase, get preapproved ahead of time. A preapproved buyer is one who has been lender approved for a mortgage. You'll have more negotiating clout with the sellers if they know they're dealing with a buyer who's financially capable of completing the purchase.
The other benefit of being preapproved is that you know exactly what you can afford to pay for a home. Armed with this information, you can set a realistic upper price limit before the negotiations begin.
Next, find out as much as you can about the seller's situation. Has the seller already purchased another property? Does the seller need a quick close? You'll also want to know the market response to the property. Are there multiple buyers lining up to bid on the property? Or has the listing been on the market for months with no offers? Answers to these questions will help you to tailor your approach.
For example, if the listing has been on the market for some time, and the sellers are closing on another home within weeks, you might be able to negotiate a discounted price in exchange for a quick close. On the other hand, if you're interested in buying a well-priced, hot new listing, you may have to put forth your best offer initially in order to be competitive.
HOUSE HUNTING TIP:
It's critical to a successful negotiation to understand the current market conditions in your area. This will enable you to know when it's appropriate to offer under the asking price, and when you should offer full price or even over full price to get a home you want.
It usually helps the negotiations if you can put yourself in the seller's shoes. Try to understand what he's aiming to accomplish. Then figure out ways in which you can accommodate him without compromising your own goals.
Negotiation usually involves give and take on the part of both parties. The actual process is accomplished through the offer and counteroffer process, which goes like this. You make an offer, which includes the price you'll pay as well as all the terms of your purchase agreement. The seller accepts the terms he can live with and issues a counteroffer to you proposing new terms the he wants to see incorporated into the agreement.
The counter offering continues until you either reach agreement, or decide that it's time to call off the negotiations. Plan to explore every possible option before letting the negotiations die.
Buyers who don't like to negotiate often want to present the sellers with a take it or leave it offer. Some sellers might be receptive to this approach. But, unless you're offering the seller his price, you're better off coming in with less than your best offer. Most sellers will feel compelled to counter a low offer.
THE CLOSING:
Good negotiators know when they've had enough. You shouldn't let a deal fall apart over petty issues. But, you also shouldn't spend more than you know you can realistically afford.
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