Every buyer wants a deal, that's for sure. Especially in this market people are pinching every penny and want to get what they perceive to be a great deal on a home for sale. I work with homes for sale in Chandler,Arizona and I can speak first-hand how conservative people are being right now.
Negotiating the sale of a home should not be flown into blindly. You and your real estate agent should both put together ammunition to prepare you for what to expect from the seller's response. Think of it as a court case: you put together evidence/reasons as to why the judge or jury should buy into your reasoning. No different here!
1. Look at the "comps" or "comparables"
Comps are homes that have sold in the area recently. Nowadays "recently" tends to mean in the last 3 months, as the market is changing so rapidly as it is (used to be 6 months). Start with the subdivision, then go out a mile or more if necessary to find maybe 3-5 sold similar homes (or more) to the one you are considering buying.
By similar I mean similar square footage, lot size, # of stories, pool or no pool, garage size, etc.
This is one of the best items you can go to the negotiating table with, since facts can't be refuted.
Sold homes are the best indicator, followed by what's currently under contract/pending, and then what is currently for sale.
2. Negotiate without emotion
This one isn't so tough for investors as it is for someone who is buying to live in the home. People have a tendancy to fall in love with the home before their offer is accepted and this is normal. However, if you have 2nd and 3rd choice options that you will also be happy with you won't carry as much emotional pressure into the negotiation.
Consider writing a letter to the seller (if it's not a short sale or foreclosure) stating your position and why you like the home. You might consider adding a picture of your family or even submitted a video to potentially soften up the seller.
3. Have your real estate agent ask the seller's agent questions
This can be an invaluable source of information. Although a real estate agent's job is to protect their client's interests, if desperate enough to make a sale they can reveal information that will put you in a better position to negotiate.
Questions like: - Why is the owner selling the home? - Have they bought another home/started making payments? - How much negotiation room is there? - Would they be more agreeable to a reduced price if terms (close date, earnest money, down payment, etc) were better?
4. Don't buy a home from someone who is testing the market/tire kicking
That 2nd term is usually associated with a buyer who is not very serious, but a seller can certainly fall into this category as well. Some sellers will not budge from an unrealistically high price.
Have your agent ask the listing agent questions like "Have their been any previous offers, and what happened with them?" This can also be asked in #3 above.
5. Learn about what kind of equity the owner has. Why? Because more equity may equal more negotiation room in price.
This one doesn't apply to as many home in Arizona, with the abundance of short sales and foreclosures, but we are starting to see more.
A simple search through online county and tax records should reveal when the home was bought, how much the mortgage was at the time, and what they now owe if they have refinanced.
So the next time you find those great homes for sale go in armed with these 5 points for maximum success!
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