5 Negotiation Need-to-Knows

Negotiating is like a chess game. It's all about strategic thinking, talking, and asserting yourself about money matters. You've got to figure out what's in the mind of the person across from you and stay one step ahead of them. Some people enjoy negotiating so much they turn into a whole new person when they save a few bucks, and others cringe at the thought of figuring out what's in the minds of the other.

It seems like every real estate pundit will now use the current market in their negotiation as a tool to get the edge on you. When it comes to buying and selling your home, there are five need-to-knows that will go a long way to protecting your interest.

1. Work from a foundation of sound information.

     It's critical that you find as much information as possible to use in your negotiating. You aren't in any position to negotiate unless you have the basic information about the market, what similar homes have sold for, how much above/below they have sold for, and how long do the homes normally stay on the market.

Your agent will help you understand these numbers, and will reach out to the offeror's agent about what is important to their party. The offeror's agent isn't obligated to divulge information but often will to complete the transaction.

It's super important to know what your own priorities are. You can only assess whether your home sale was successful if the home and the terms of the contract are worth to you. Know how much you will accept and your own priorities before negotiations begin.

2. Approach the Negotiation as a Problem-solving Challenge.

     Toay's negotiations are more like problem solving considering the needs that must be met of both parties. Negotiations are normally a power struggle between buyer and seller and their bargaining leverage. But another factor that really influences the way a deal goes are the banks. Banks have their own guidelines that must be met for anyhting to follow through.

A lot of buyers have thought they got a great deal by getting a bargain basement price on a short sale, only to have the seller's bank condition approval of the deal on a massive increase in the sale price. The opposite is also true. Many deals fall through because the home fails to appraise for the puchase price the  buyer has agreed to pay. If the buhyer can't qualify for a high enough mortgage, or the seller can't pay the mortgage balance off, there won't be a deal.

Because of these reasons it's important to approach negotiating as problem solving instead of a power struggle.

3. Manage Your Own Mindset.

     Don't buy a home if you don't love it. It's often rational to hone in on a specific offer price based on how much you like the house, or how much you would hate to lose it.

Be aware that she who is the least emotionally attatched to a particular outcome has the greatest bargaining power. The more attatched you are to a home, price, etc. the most likely you are the freak out and throw money at the situation to get your way, which in turn could  make you miss important points in the contract and skip over your own needs.

Knowing what is and what isn't within each parties control is key in managing your mind set. To avoid emotional exhaustion ask your agent for some help on what items are and aren't negotiable. On the other side it's important to know what items are negotiable. These items can be deposit amounts, length of escrow, seller repairs, and if the property is to be taken in as-in condition. These negotiations can empower you to maximize how compelling your offer is to the other side. 

4. Minimize Time Pressures.

     Many buyers and sellers make offers and counter offers only because they have to be moved out buy a certain date. Because shelter is a basic human need, having to move around without a place to stay can make most of us feel ungrounded.

The problem lies in that moving costs and deadlines can cost you thousands of dollars and even make some compromises in terms of the actual property itself. Some compromises that you'll regret down the road. If you are facing a deadline in moving out, you better find a plan B such as finding a rental house that will work for awhile, or a hotel. Any sort of shelter will satisfy your basic human needs.

5. Act & React Quickly- Not Impulsively.

     Make an offer on the house you KNOW you want. If you receive an offer or counteroffer respond to it. Remember that time is of the essence and that hesitation always leads to lost opporitunities. You can sleep on your decision overnight, but don't slep on it for a week. You don't sleep on it forever because you never know when another buyer will show up and change the dynamics of the buying process, costing you more money and time.

This is why it's so important to be clear on the market data, your own budget and your own top and bottom lines from the start, so you are positioned to act quickly, strategically, and intelligently when the circumstances require.

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