3 Negotiation Tricks You Should Know Before Buying a House
John F. Kenney once said that you shouldn’t negotiate out of fear. Instead, you shouldn’t be afraid to negotiate. And that holds when you plan to buy a house. It’s a considerable investment, possibly one of the biggest in your life, and you shouldn’t shy away from negotiating.
Buyers usually feel obligated to stick to the sellers’ asking price available on real estate company listings. But that’s the last thing you want to do. Most sellers are ready to negotiate because they want to get their hands on some big cash out of the deal. This puts you in a slightly favorable position, but you still need a few negotiation skills to bring the price down to your budget. Here are some of the tricks that you can keep in mind while talking to a seller:
1 Identify value-creating moves
Identifying value-creating moves is often challenging for buyers. The theory works on the fact that a few things are affordable to me to give but quite valuable for you to receive. For example, you find a house that is up for sale at $500,000. But your buyers agent Sydney does some research and finds out that the fair price is approximately $400,000. The seller immediately refuses your offer, saying that you are nowhere close to the asking price.
This happens because sellers look at prices that others paid for properties in the same neighborhood a few years back. On the other hand, buyers look at comparable transactions to determine a fair price. That’s where you need to identify your value-creating move. In this case, you offer $425,000 and say that you are confident that if the seller finds a buyer willing to pay more in 60 days, you won’t be a part of that deal anymore. But if he can’t find a buyer in 60 days, he has to close the deal at your stated price.
2 Consider the market value and not the asking price.
Negotiating a real estate deal becomes easier when you compare the market values of properties instead of their asking prices. A buyer’s agent can help you find out the market value of the properties you select. Once you know the market value, you can tell the seller the difference between the market value and the asking price. That should give you an upper hand in negotiating the deal.
3 Use the price anchoring technique to figure out the lowest price.
Low anchor is an effective negotiation strategy that helps determine the seller’s lowest price. For example, you tell the seller that you looked at some of the numbers, and the best price for the house is $400,000. The seller counters by saying that $400,000 doesn’t work for him, and the last price he can offer is $450,000. That is still $50,000 less than the asking price of $500,000.
Negotiation is an art, and you need to become a fast painter to make the perfect portrait. Follow these tricks to secure an affordable deal and keep more money in your pocket.