So you’re ready to buy a piece of real estate.
Or maybe you have property to sell. Whether you’re a buying or selling, you should work with a real estate agent. Here’s why.
Negotiation skills matter a lot. Great real estate deals are only available to powerful negotiators. If you buckle too easily, you risk being taken advantage of by knowledgeable buyers or forceful sellers.
Here are 8 tips that you need to master before you negotiate your next real estate transaction.
1. Hire A Good Real Estate Agent
A bad real estate agent can cost you tens of thousands of dollars.
Spend time choosing your agent. A strong choice will pay off your investment tenfold. The person you choose should have shark-like negotiation skills needed to secure good real estate deals.
Interview your choices, preferably in person. A seasoned, experienced agent will be able to answer all of your questions.
2. Understand the Neighborhood
Real estate deals depend on the neighborhood. If you don’t know how much the neighbor’s house sold for, you won’t know how much your house is worth. Become an expert in the neighborhood.
If you’re selling your house, you’ll get a better deal if you price the home to suit the neighborhood. Your Realtor(R) should be able to help you.
If you’re buying a property, become an expert in its location. Visit at all hours of the day. The charming neighborhood may seem quite different at night when most of the partying residents are home.
Are there any good schools nearby? Even if you don’t have kids, your proximity to quality schools affects your home value.
Your real estate agent should be able to answer most of your questions about the neighborhood. Choose someone who is well-respected in the area.
3. It’s Not Real Unless It’s In Writing
In real estate, words are meaningless until they’re put on paper. Don’t depend on verbal contracts. If you haven’t signed your name to it, the agreement doesn’t exist.
Sellers sometimes lure buyers by feeding them false hope. Once offers start flying in, the seller manufactures a bidding war to entice desirable buyers. Don’t get your hopes set on a single property.
4. Don’t Be Discouraged By Friction
Negotiations only end quickly if one person is making a mistake. If buyers leap at your price, you’re probably asking for too little. By the same reasoning, buyers should be wary if the seller is too eager to close the deal.
If the entire negotiation goes smoothly, it might mean you could have gotten a better deal. Be cooperative but don’t bend over backward to make the other party happy. It’s ok if there’s a little friction
5. Someone Has to Get the Last Concession — Make Sure It’s You
Here’s a simple rule to remember during the negotiation process- always get the last concession.
A concession in real estate is anything that sweetens the deal. You might be able to convince the seller to repaint the property’s walls or perhaps install new flooring. Realtors(R) often negotiate for the seller to cover entire closing costs.
If you always demand the last concession, the other party will quickly learn to stop trying to get extra goodies. She’ll realize that nothing that she wants is free. If she’s going to ask you to give something up, you’re going to do the same to her.
For example, during the last round of negotiations, instead of announcing that you’re happy with the proposed price, say that you agree, as long as you can have one last thing.
Perhaps you want the contractor to finish sooner. Maybe you want a couple of appliances thrown into the deal. It doesn’t matter what it is.
6. Remember: You’re Buying a House, Not Choosing a Life Partner
If you’re buying a house, focus on what you’re trying to do. Great real estate deals aren’t made based on emotions. You might be in love with the cozy breakfast nook or the spacious backyard, but don’t let that blind you.
Real estate investments are tricky, so you need to go into them with your eyes open. A bad financial decision can take years to recover from.
7. Real Estate Deals Depend On The Market
The type of deal that you’ll be able to negotiate depends on the market conditions.
A buyer’s market means that there are more homes on the market than homebuyers. It’s the best time to be a buyer, so push your advantages.
If you’re trying to sell a house in a buyer’s market, you need to be flexible. Properties may take longer to sell. Buyers might demand that you lower your listing price.
In a seller’s market, buyers fight for a limited number of homes.
If you’re trying to buy a house, understand that the seller has the advantage. If you’re tangled in a bidding war, trying to convince the seller to cover the closing costs or take a couple thousand dollars off the final price probably won’t work.
8. Get a Home Inspection
Hire a home inspector. It’ll cost a couple hundred dollars upfront but it could potentially save you thousands. A home inspector will give you an unbiased opinion about the property and any issues it has.
Here’s what you need to do if you’re the buyer:
- Research your inspector
- Attend the inspection in person
- Read the inspection report
If you’re the seller, you should:
- Prepare your home
- Get a presale inspection
Thinking About Buying Or Selling A Piece Of Real Estate?
Everything is negotiable. Choose a real estate agent with fearsome deal-making skills and you might walk away with a great deal whether you’re buying or selling.
Practice before you come to the negotiation table. Prepare yourself mentally for battle. If you don’t fight for what you want in real estate, you’re not going to get it.
There are others ways that you can prepare to make a great investment. Poke around on our site to discover more tips.