NEGOTIATING to buy a home is similar to playing poker - it's not the cards that win the game, it is how you play your hand. The good news is, anyone can learn how to play cards.
And even if you don't enjoy the cut-and-thrust of real estate deal-making, a few simple tips can help you get the best result.
Ask experts -- buyer agents -- their secrets when negotiating a home sale on behalf of a client. How can buyers invest in the best home at the lowest price? Where can they go wrong? Where will I find the best values?
ADOPT A POKER FACE
Negotiation is an art based on "knowing when to hold 'em and knowing when to fold 'em", David Pylyp, Buyers Agent says.
Do not wear your heart on your sleeve when dealing with Listing Agents -- remember, they are legally bound to work for the sellers.
"I always tell people, striking a good deal is about knowing how to Structure it," David Pylyp says. "Know exactly where you want to end negotiations before you put in an offer . . . this helps you control negotiations." By planning your strategy before you begin you will remove the emotional component.
Knowledge is power when negotiating. You must understand the market and purchase with knowledge, not emotion.
SPOT A BARGAIN
You can't buy a bargain unless you know one when you see it.
Do your homework. Compare properties that have sold in the past three months so you can approach negotiations confident that you know your stuff.
Many Purchaser's believe that Power of Sale or Foreclosure Properties will be hugely discounted yet fail to realise that multiple buyer interest pushes them directly to market value or above. Those properties in dire need of repair and deferred maintenance indeed do sell at the bargain basement prices. But the savings become sweat equity.
KNOW IF THE SELLER WILL NEGOTIATE
Not everything in real estate is negotiable, but experienced deal-makers can secure top-notch deals in any market.
In the current property market, those who can negotiate can pick up some real bargains.
Good negotiators will track down vendors who need to sell and are motivated to sell. They are Big D vendors.
They are desperate to sell due to death, divorce, debt and/or disaster."
Mr. Pylyp says skilled negotiators ask many "why", "what" and "how" questions to find out as much about the seller's position as possible. Questions that include:
- WHY is the vendor selling?
- HAVE they bought another property?
- WHAT possession is most preferable?
- HOW long have they owned the property?
- HAVE they had any other offers?
- ARE the vendors just testing the market?
- HOW long has the property been on the market?
- The more you know, the higher the likelihood of knowing which cards to play.
MAKE a Private Owner Dance
In private sale negotiations, this can flush out critical information about the seller's price expectations.
Indicate you are interested in the property at a particular price, but do not document the offer until it is verbally accepted by the vendor.
The vendor, if they agree to your offer, is effectively showing their best price position without a formal contract. You can still walk away if the price or terms are unacceptable.
ESTABLISH AN OFFER
Making a first offer is a critical point. Go too low and the vendor may get defensive, which may reduce your future negotiation power.
But your first offer should be based on your research and should not be your top price.
By making an offer below your best price, you create a margin for increasing it, which lets the vendor feel they are getting some sort of win, too.
An offer about 10 per cent below your researched market value figure is a good starting point.
Always act as if you are looking at other properties, that this isn't the only one.
End your offer on uneven number, not $350,000 but $351,000, as most buyers will end in even numbers.
Making the first offer allows you to frame the negotiation so you are in the box seat and will get the last right of reply."
PUT OFFERS IN WRITING
One of the biggest mistakes novice negotiators make is not putting a deadline on their serious offers and, even worse, not putting them in writing.
A top tip is to attach a signed deposit cheque if making an offer on a private sale home.
TIME IS OF THE ESSENCE
Get signatures to a contract as promptly as prudent. There are situations when another offer may be in the wings that will benefit from all your negotiations with the owner, by committing to a slightly higher offer.
And in that instant, you are out of the deal. You will, after successfully bidding, miss out on the property. You crafted the transaction, you negotiated the Seller down, You had your deposit but you didn't get it on paper. And then you got scooped.
Poker players who help a player who claims to be struggling never win games.
The same goes with real estate.
Falling into the soft or gentle camp or the decimate the vendor camp will not win the day.
Being too clever, too quiet or too arrogant towards the Listing Agent are other traps . . . you will need to establish a rapport with the agent and let them know you're interested if you are going to be the successful purchaser."
And if you look as if you're about to make a 50 per cent saving on the home's initial listed price, be afraid. BE VERY AFRAID!
Something is definitely wrong. You're probably about to make the most expensive mistake of your life.