Many people tend to look at negotiations as a conflict between two sides, when in fact, it’s quite the opposite.
Chris Heller, Chief Real Estate Officer at OJO Labs
How to get the best deal
No matter how complex and time-consuming negotiations can be in a seller’s market, getting into them without having the basic knowledge to help you understand what’s going on can ruin all the chances of success you might have. In a seller’s market, where all the odds are on the opposite side, and you have to compete with many other buyers to get the property of your dreams, knowing how to get the best deal can save you thousands of dollars.
That’s why it’s important to know what the process consists of and how to handle everything in a seller’s market to be able to get the best outcome out of any deal.
Do your research
The best way to approach any real estate deal is first to get a better idea of the Florida market and the property you’re interested in. That’s why whenever you find a property that matches your taste and budget, the first thing you need to do is research. Gather information about the location, characteristics, and condition of the property at interest, as well as other similar properties that were sold in the area recently. You can do this by turning to online resources, asking people familiar with the property, or consulting your real estate agent.
This will give you a better idea of how everything moves and get the upper hand when you go into the negotiations as the opposite party (in this case, the seller) has no idea what you know and don’t know. For instance, if they have set the price far higher than other properties in the neighborhood, you will know it and be able to lower it to a more reasonable cost.
Once you get a general idea of the local market, you should get familiar with the people you’ll be negotiating with. You want to know who the seller and the agent are, how long they’ve been in the business, what negotiation strategy they usually use, where they got their real estate license, their reputation, and so on.
To do this, you can schedule a meeting with the other side’s agent to get a better feel of the situation and try to discover something that may weaken their position. It can also shed light on some disclosures, or things you aren’t aware of that can potentially change the whole course of the negotiations or how much you’re willing to pay for the property.
Know the most, let know the least
The research is done to get yourself in the front of the race by knowing as much as you can about the other party, while letting them know as little as possible about you, including how much you know. This allows you to use your knowledge to leverage your situation by appearing unknowledgeable, but actually knowing a lot about the property and the surroundings.
A common strategy in the car dealership industry, for instance, is to negotiate with companies at the end of the month. Why? Because that’s when people are trying to meet their quotas and are willing to bend a little bit more than usual, so it’s a great chance to get a better deal.
Have a plan and a strategy
Once we’ve gathered all the important information and we know what matters to you, we step towards the most critical part of the process: forming a negotiation strategy. This actually boils down to finding two things: what the best possible outcome would be for you coming out of the negotiations and the range of acceptance you would be willing to agree on while negotiating.
These two indicators, along with the research you did and the intel you gathered, are actually what shapes the whole negotiation process. They let you and your real estate agent know when it’s smart to back away from the negotiation and when it’s a good idea to continue with them.
Enter the negotiations with patience and an open mind
Many people tend to look at negotiations as a conflict between two sides, when in fact, it’s quite the opposite. You should instead see it as two sides trying to solve a puzzle. Both are trying to find out if the lowest amount one side is willing to offer is compatible with the highest amount the other side is asking for, and try to meet somewhere in the middle where everyone is happy.
Don’t rush to send and answer an offer. A mistake we’ve seen many do over and over again is rushing to respond to an offer, thinking that doing it later would be too late. But, the better thing to do is go through it carefully and analyze the content in it. What does the offer mean? What is the other party trying to get? Sometimes, sleeping on it can make a huge difference and get you a different, better perspective on the whole negotiation.
Brief Explanation Of The Negotiation Process
After you finish the negotiations, the next step would be sending an offer to the seller. Once you do this, they can respond to it in three ways:
- Counter the offer: When a counteroffer is received, the seller agrees/doesn’t agree with the offer partially and suggests an option they feel is better. You can then decide if you will accept the counteroffer, decline it, or counter it back again.
- Accept the offer: If an agreement is reached, all parties review the contract’s terms and sign it off. After this, the pending period starts, during which other buyers can’t compete with your agreement until the Condition Day has expired.
- Decline the offer: No deposits are needed, and you can go to the next property to find yourself a better deal!
Once you’ve started the home buying process, let time do its thing. Time is power, and stepping back to allow yourself to make the right decision will take away the pressure the other party might try to put on you and ultimately result in you making a better, more rational decision. In fact, if you’ve ever been through car negotiations, you might’ve noticed that the salesperson often leaves your side and comes back, later on, to ask about your decision.
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About the author
As Chief Real Estate Officer at OJO Labs, Chris Heller brings deep expertise having held influential industry positions including CEO of mellohome and former CEO of Keller Williams Realty International (KWRI). Chris earned his real estate license when he was 20 years old and built one of the most successful real estate teams in the United States.
Chris brings his wealth of industry knowledge to the Agent Advice Editorial Board. Chris says, “Agents need a way to make smarter decisions based on data and real reviews, not just sales pitches. Agent Advice is a way to help them get the information they really need. The higher the quality of information that agents can access quickly, the better decisions they can make.”