Daily News

MBA Urges Regulators To Avoid Invoking Suitability Standards
The Mortgage Bankers Association (MBA) recently made a preemptive strike against what it obviously perceives as the next threat against the mortgage industry - "suitability standards." Read more...

 

How To Effectively Negotiate A Real Estate Purchase

(As a home buyer, one of the most stressful or rewarding things involved in the process is the negotiating of the price with the seller.)

If you are uneducated about the overall process and do not have much confidence about how high or low you should go, the seller may see this and take advantage of you.

On the other hand, if you are too arrogant and are not willing to meet the seller halfway or sometimes even two-thirds of the way, you may just talk or bully yourself out of a possible deal.

Mark Nash's article, "Negotiating a Real Estate Contract" posted on ezinearticles.com provides a helpful list of how to ensure a successful real estate negotiation.

"Keep your emotions out of real estate contract negotiations."

You do not want to enter or create a hostile situation with the seller because you could lose the deal or create a negative situation with the person you may have to deal with for up to several months.

There are three possible outcomes once a buyer drafts a contract and presents it to the seller: the seller will accept the terms which results in a contract, the seller will change the terms and counteroffer or the seller will reject the terms and the process will need to start over or one of the parties may walk away.

What determines one of these outcomes is the actual offer for the right to purchase the property.

The low-ball offer has become much more prevalent this year since the market has abruptly swung in the buyer's favor.

"That being said, some of the low-ball offers that buyers recently have attempted to negotiate were twenty-percent under list. Sellers of appropriately priced homes did not even respond." The general rule of thumb is to not offer less than 80 percent of the listed price; the seller may be insulted.

Now, if you receive a counteroffer, you will need to feel out what the seller is looking for.

"If sellers don't move off their original price much, they are showing signs of digging in their heals, don't expect much movement, each round. Early signs of rigidity in counteroffers tell me to buckle your seatbelt another notch, because the other side is not flexible."

Along similar lines of the counteroffer, but more serious, are bidding wars. These can get downright nasty. In the end of one of these wars, you will probably end up paying more than you would have liked but if you really want the home, it is worth it.

"One of the main problems in bidding wars is not knowing how many offers are on the table. Real estate license laws usually favor the listing agent's need for confidentially with their client, the seller. I've also seen all the offers drop out except for one, and you end up negotiating against yourself."

Try not to participate in a multiple offer situation because they often become competitive and emotional. Rather, stay on the sideline sort of speak and wait for the near end and then make you offer. Most of the ugliness will have settled by then.

A lot that has to do with the art of negotiating depends on your own judgment. The negotiating process should not be rushed, yet a long (weeks) delay indicates the other side is having second thoughts and it may be worthwhile to offer a higher price or walk away. Good luck!

Back to Articles