Negotiating a real estate deal requires a lot of skill, know-how, and a check on your emotions. As a buyer, you don’t want to spend any more than you should for a home, no matter how much you fall in love with it. Unfortunately, some buyers make a few mistakes that can hamper their negotiating power.
Here are some things you should never do when you’re negotiating on a real estate deal.
Putting Too Much Emphasis on the Price
Sure, the price is a crucial component in the negotiating process. After all, no buyer wants to spend any more than they have to. On the contrary, buyers are out to get the lowest price they can for a good home. But the price isn’t the only thing that buyers should be looking at.
There are plenty of other factors in an offer that can make or break a deal. Consider any incentives that the seller might be offering. If the seller offers to pay a portion of the closing costs, provide you with the closing date you want, or throw in all appliances and furniture, these are things that can sweeten the deal and offset whatever price they may not be willing to budge from.
Of course, you want to make sure you’re not paying any more than what the home is worth, which is why it’s important to have a comparative analysis reported pulled and reviewed before you make an offer on a home.
Going in With a Lowball Offer
As already mentioned, you’ll probably want to get the lowest price you can on a home purchase. But you also don’t want to go so low that you insult the seller. Further, if the offer you provide is a lot lower than what the home is actually worth, you’re likely to go nowhere with the negotiation. In this case, the seller will be more likely to toss your offer and refuse to even counter or negotiate.
Always keep the market in mind when making an offer, as well as the prices of similar homes that have recently sold. If your lowball offer is actually in line with the market and the listing price is inflated, you might have a good reason to go in with a much lower price. Just make sure to go into the negotiations armed with proof that what you’re offering is a fair price.
Offering the Most You Can Afford Upfront
On the flip side of lowballing the seller, you also don’t want to fork over your absolute maximum price right out of the gates. Unless you’re in a bidding war or the seller’s market is red hot, going in with your best foot forward isn’t always the best tactic. Of course, this will depend on the market, so be sure to consult with your real estate agent first before determining a good offer price.
The problem with offering the most you can afford upfront is that you could be stuck with nothing much left to give if the seller tries to counter. If you give everything at the beginning, you’ll have no wiggle room to negotiate.
Neglecting the Days on the Market
There are many factors to consider when offering a price on a home, and the number of days that a property has been sitting on the market is one of them. In every market, there’s an average number of days that homes spend on the market before being sold. If a home has been on the market longer than average, you might have more negotiating power. Don’t neglect this little fact when you head to the negotiating table.
Not Using Certain Items as Negotiating Tools
If the seller has explicitly stated that certain things are not included in the purchase of the home – such as appliances or window treatments – consider using these as negotiating tools. You can agree to the price they’re asking, but only if certain excluded items are included in the deal.
Letting Sellers Know You Can Spend More
While you may want to go in with a strong offer to sway sellers in your direction, don’t let off that you can spend any more than what you’re offering. How much you can really afford should be a critical detail that’s kept between you and your real estate agent. Disclosing this information will only reduce your negotiating power while strengthening that of the seller.
Not Warming Up to the Sellers in a Competitive Market
In a competitive market, it’s often advised that buyers make sellers feel all warm and fuzzy by supplying a personal letter along with their offer explaining how much they love the home. Such schmoozing can really help sellers warm up to your offer if you’re competing with other willing buyers. Not doing so could hamper your negotiations.
Gushing Over the Home
If the market is in favor of buyers, on the other hand, warming up to sellers isn’t always necessary. In fact, if you gush over the home too much, you could make the sellers think that you’re willing to pay whatever the sellers want. That’s not what you want to happen when you’re trying to negotiate a lower price. Instead, keep your passion for the home to yourself.
Criticizing the Home
Flat-out criticizing the home might not be a good idea, either. Insulting the sellers will do little to help you come out of the transaction with a successful deal. Even if there are some things about the home that you’d rather have changed, don’t let the sellers in on this information.
The Bottom Line
While there are things you can do to help boost your odds of a successful deal, there’s a slew of others that can throw a wrench in your negotiating tactics. When buying a home, make sure to steer clear of the above blunders and heed the advice of your real estate agent instead.