If negotiating a real estate deal were solely about price, it might be easy. But too often, people end up dickering over details. When will the deal close? Who will pay for which repairs? Does the sandbox stay or go? Pretty soon, buyers and sellers start acting like kids in that very sandbox, struggling over the same shovel. You don’t have to become best friends with the folks on the other side, but if you can avoid temper tantrums, you’ll be able to hash out a winning agreement. Here are seven ground rules for negotiating a real estate deal:
1. Don’t get emotional
Something about houses brings out the four-year-old in us all. That’s why it’s important to keep emotion out of negotiations.
2. Consult an expert
Chances are you’ll only haggle over a house a few times in your life. A REALTOR® will have done it many times, and she’ll have a good understanding of how to respond to any problems that arise during the process.
3. Know who your expert is working for
In some states, it is perfectly legal for an agent to represent both the buyer and the seller in a real estate transaction, a situation known as “dual agency.” Usually, dual agency doesn’t result in any problems, but everyone involved needs to have a clear understanding of the agent’s obligations to both parties.
4. Have good information
It’s important to base your offer on hard data. Your REALTOR® can prepare a Comparative Market Analysis (CMA) that will show the asking and selling prices of similar houses in the same market.
5. Know the house
A CMA can give you a ball-park idea of what a house is worth. But to really refine your offer, you need to be familiar with the specific house’s condition and special features. Be sure to get a home inspection to get expert advice on the state of the house.
6. Know the other side
If you understand the motivation of the person on the other side of the table, you can be a much more effective negotiator. If a buyer needs to move fast, maybe he will be willing to offer a premium to a seller willing to close the deal quickly. If a seller is downsizing, maybe the buyer can make an offer on furniture and appliances the seller won’t need in her next house.
7. Don’t low ball
If you’re a buyer and you’re genuinely interested in a house, don’t make an offer that’s so far below list price that it will likely be rejected. The seller is liable to throw a hissy fit (see #1 above), and you’ll be back to square one in your home search.