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Buyer Negotiating Tips
Some people are born negotiators.
They'd negotiate the time of day if they had the
opportunity. Many people, however, feel uncomfortable
negotiating. If you fall in the second camp, think of a home
purchase negotiation as a dialogue between you and the
seller. It's a forum for exchanging ideas with one another
to see if you can come to mutually agreeable terms. If you
can: Great. You've bought a home. If you can't: that's OK,
too. You'll find yourself another home and the seller will
find another buyer.
There are many ways to negotiate a home sale.
It's hard to generalize because each transaction is unique.
But, in most cases, a successful negotiation involves give
and take from both parties. Keep in mind that you want the
sellers to feel good about selling their home to you. You
may need their cooperation during the transaction.
For example, you may want to renegotiate the purchase
contract if your inspections reveal unanticipated defects.
You'll stand a better chance of successfully working through
these negotiations if you've built good rapport with the
sellers. A cooperative, rather than adversarial, stance
usually produces good results.
FIRST-TIME TIP:
In the spirit of give and take, you may want to plan your
negotiation strategy so that you give up something you want
in exchange for the seller giving you something you want.
For instance, let's say you know that the sellers prefer a
short close, and you think his price is a little high. You
might start the negotiation offering a 60- or 90-day close
and a price that's a bit below the top price you'll pay.
When the seller counters back with a 30-day close, you can
accept this if the seller is willing to sell at your price.
With this strategy, it's effective to save a bargaining
chip, or two, until a critical point in the negotiation.
That bargaining chip is often your best price. You may be
willing to pay the seller's price if he agrees to take care
of some deferred maintenance. In this case, you would hold
back on agreeing to pay his price until the seller agreed to
make the necessary repairs.
Another strategy that can break an impasse is the
"either/or" approach. With this strategy, you give the
sellers two options. They can take their pick.
Suppose you're locked into a lease that runs 4 more months,
and costs you $2000 a month. You can't afford to pay the
seller's asking price and make double monthly payments for
mortgage and rent.
The seller wants to close in 30 days; you prefer 90 or 120.
If the home is fairly listed for $300,000, you might offer
to pay $300,000 with a 120-day close, or $294,000 with a
30-day close. The seller can choose. By the way, it can
further the negotiations if the other party understands your
circumstances.
It helps to plan out your negotiation strategy in advance.
Find out as much about the seller's situation as you can.
Determine the highest price you're willing to pay. Make a
pact with yourself to walk away from the property if you
have to significantly overpay to get it.
Sometimes it's best to stand firm during negotiations.
Perhaps you've negotiated to your best and final price. You
may want to lay your cards on the table and let the other
party know this. There's no rule that says you must counter
with a new price.
THE CLOSING:
And remember, all elements of the purchase agreement are
negotiable, not just the price.
By:
Dian Hymer November 26, 2001
Dian Hymer is author of "Starting Out, The Complete Home
Buyer's Guide," Chronicle Books.
Copyright 2001 Dian Hymer
Distributed by Inman News Features
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