When negotiating, there are four goals that I as your Metro Detroit real agent have on my mind:
1.) To get the best price possible for you.
2.) Get the most favorable terms and conditions to protect my buyer.
3.) To minimize risk and exposure my home buyer.
4.) To get the home and close the sale.
Those is what I try to accomplish on every home negotiation. Prior to negotiating, keep in mind that price is determined one of four ways:
***Comparable sales. Reviewing recent sales of comparable properties (within last six monthes), how long they took to sell, and comparing the area's selling price to list price will give you a good sense of relative market value. This is one of the more important valuation techniques used by appraisers and real estate agents. However it is not unusual to have to overpay or to get a "deal". You also have to look at how "nice" the homes were that were sold and compare them to the condition of the home you are looking at.
***Motivation of the Buyer and the Seller. The price can be greatly affected by how much the Buyer wants the home and how much the Seller needs to sell it. The ability to get a below-market price on a home will depend on the Agent's ability to determine the motiviation of the Seller and devise a strategy to take advantage of any Seller weakness. Sometimes it just isn't possible to get the seller to budge because of what they owe. Or the seller may just be unrealistic on what they want.
***Suppy and demand of available properties. Simple economic principles provide that lots of buyers create a strong demand and a low supply will increase the price of Metro Detroit homes. The reverse holds true when there is a high supply and low demand. In real estate terminology, they are called the Seller's Market and the Buyer's Market. In a "hot" Seller's Market your Metro Detroit real estate agent's job may be to just get you the house. In that case you may pay more than list price and your Agent will aso have to find ways to strengthen your position versus that of other Metro Detroit home buyers.
***Sometimes a seller just overprices a home and yet it sells. Is it luck or is it stupidity? Sometimes buyers get emotionally attached to a home even though it is over priced. Sometimes they have to have it. Sometimes it may be a smart buy because of the cost of all the great updates the home has. Sometimes it may be the nicest home and the buyer has to buy quick. (Sometimes a relocation Buyer wants a specific home in a certain area).
Before you start negotiations, determine the following:
- What do you believe to be the fair market value for the property ?
- What price would you like to pay ?
- What is the most you would pay ?
This last minute evaluation needs to be made free of your emotions to help you focus on your goal:
Keep in mind that:
1. That you want this house.
2. The best price possible is obtained when the Seller is willing to stretch to a lower price. If the stretch is too far then the negotiations will not be completed. You want the Seller to be saying "the price is lower than I would have liked, but ...". You don't want to offend them.
3. That this is the nicest house you looked at out of all the ones you have seen. It may fit your needs better. It may have the layout you want. It might have all the ammenities you want.
4. When you play the game you have to be willing to lose the game. If you are approaching the negotiations as a game and are going to make offers that are not like to be agreed upon, you will be keeping the door open for someone else to make an offer on the property. This is especially true for a good house in a great location in a Sellers market. Even in this market good homes are being scooped up quickly if they are nice and reasonably priced.
Devise a strategy with your real estate agent that will achieve your goals and minimize the opportunity for someone else to make a competitive offer.
Good luck on getting your dream Michigan home whether it is Livonia real estate, or Novi real estate, or any metro Detroit home.
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