1. 8 tips for negotiating the best deal
when you buy (or sell) your home
2. 1. Get – and stay – clear on your deal points (must-
haves and deal-breakers), and keep them to a
minimum. If you’re trying to get a chunk off of the
asking price, as a buyer, or trying to be a stickler to
your bottom dollar, as a seller, you’ll be much more
effective if you can aggressively negotiate on a
small number of items. If you must have ten
different things your way, you’ll come off as
unreasonable and impossible to satisfy. If you have
just a couple of musts but can offer flexibility on
other items, you’ll be much more likely to get your
way (or close to it).
3. 2. Don’t take it personal. If you are trying to be
a hard-core negotiator, it’s best
not to get overly emotional
about the offers you make
and receive from the other
side of the bargaining table.
Homesellers: if you get a low
offer, understand the buyer is
simply trying to get the best
deal they can - they are not insulting you or your
home, or trying to throw a monkey wrench in
your financial plans.
4. 3. Investigate what is negotiable (and what's not!)
on the other side of the table. Have your people
(your agent) ask their people (their agent) what's
important to the folks sitting across you at the
bargaining table. They have the right to decline, but
nine times out of ten, you'll get some information
that will empower you to tailor your offer or
response in the vein of a win-win. If the listing
agent says the seller 's top priority is cash (hint: it
always is!), but that the ability to move on without
doing any more work to the home is a close
second, consider making an as-is offer (subject to
your right to obtain inspections, so you know what
you're getting yourself into, before you remove
contingencies).
5. 4. Sellers: work with a very reputable agent who has a
strong track record of success at your type of
transaction. Look for an agent who
(a) has a good, recent track
record of closing deals in your
area, and (b) whose closed sales
have a high list price-to-sale price
ratio (LP:SP ratio). The LP:SP ratio
is a number that reflects how close
to the asking price their listings have sold for, on
average. Agents with a higher LP:SP ratio than the area
average tend to have very strong skills of pricing properties
appropriately for the market, and for negotiating their
clients' deals. Plus, once you know that your agent is an
LP:SP rockstar, you're more likely to treat their advice with
more trust and less skepticism, resting assured that you're
working with an expert!
6. 5. Buyers: boost your “closeability” factor. Many a
seller would take a lower offer that seemed highly
likely to actually close over a higher offer that has a
snowball's chance in you-know-where of ever
actually closing. Make sure your offer has a high
"closeability" factor by insisting that your broker or
agent submit it in a complete package that includes
a well-written, detailed loan approval letter that
verifies that you have sufficient cash to close the
transaction, that your credit checks out and your
job tenure is robust.
7. 6.Get educated. There's much more that can be
negotiated than just the purchase price. Ask your agent
to educate you about the full range of items that are up
for negotiation, as well as the implications of giving or
taking on repairs, contingency periods, closing costs and
included items. Also, collect as much background info as
possible before you make or respond to an offer to buy a
home. Are there multiple offers? How long has the place
been on the market, compared with the area norm? Such
things should be factored into an offer or a response.
8. 7. There's no such thing as a national rule of thumb.
One of the most frequently asked questions among
homebuyers is: "How much (below or above) the
asking price should I offer? What's the rule of
thumb?" Sophisticated real estate consumers know
that real estate is a hyperlocal phenomenon; trying to
make an offer on the basis of a national rule of thumb
is not just naive, but also results in ineffective offers
with a low chance of being accepted. Have your agent
brief you on the local area's pricing trends and
negotiation standard practices, as well as the all-
important recent comparable sales data, and use
that, along with your personal priorities, values and
opinion of the property, to formulate your offer or, if
you're a seller, your response to a would-be buyer's
offer.
9. 8. Be respectful. Didn't your grandma
ever tell you that you'll draw more
bees with honey than with vinegar?
Well, mine did, and although she said
that in the context of my teen-era
negotiations vis-a-vis my Dad for
phone privileges, the advice is equally
applicable to negotiating a real estate transaction. It's
never a good idea for buyers to gush over how much they
love the house, and can't live without it, and so forth;
that can certainly put you behind the 8-ball in terms of
your bargaining power. But it certainly never hurts to
accompany your offer with a polite letter about yourself
and, or your family to the seller, explaining what you do
like about the house and asking them respectfully to
consider your offer in the spirit it is made.
11. Randy Bett
Investment Realtor/Author/Investor
Real Estate Professionals Inc.
Better Group Real Estate
202-5403 Crowchild Trail NW
Calgary, AB T3B 4Z1
Phone:403-774-7464 Ext:1
Fax:403-208-0082
Toll Free fax:888-711-6801
