7 Steps to Effective Negotiations when Buying a House
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There are few more critical decisions in life than purchasing a home. And whether you’re buying a house for the first time, seeking to upgrade, or looking for something permanent after a period of renting, the process of negotiation remains hugely important.
A survey conducted by the National Association of Realtors found that the average buyer views ten properties during the process of buying a house before finding the one that suits their needs. So no potential house purchaser wants that dream home to slip away once that it’s been identified.
So here are seven top tips from quick house sale specialists Property Solvers that will help you ensure that your house buying negotiations go smoothly.
1. Know the Market
It’s absolutely essential to understand the local market before you begin house hunting, and certainly before you enter into negotiations on price. You need to be 100% clear what the going rate is for the property type and locale that interests you.
If you know that similar properties are selling for less, then you can offer below the asking price, while if you’re potentially picking up a bargain then be ready to offer the asking price and force your way to the front of the queue.
Furthermore, there are tons of data at your fingertips on the Internet nowadays via the wide range of online portals out there – so be sure to take advantage of all the information available.
2. Research the Seller’s Background
There is only so much you can find out about a seller before making an offer on a house. But do use the online resources available, and don’t be afraid to seek further information from the estate agent and when you undertake the home inspection. If a vendor has motivation then this can make a big difference to the potential price of the property in question.
3. Use Your Time with the Vendor Wisely
Use any times that you spend with the seller to find out more about their particular situation. Try to find out why they are moving, and what their position is in terms of having identified and secured a new property. If a seller is moving due to relocating with work, for example, then they may have the motivation to sell more quickly. And vendors that have already secured a sale on their next home probably won’t want to negotiate too hard. Use any information that you’re able to glean to your advantage.
4. Promote Yourself to the Seller
You need to make yourself as attractive as possible as a prospective buyer. Let the vendor and realtor know if you’re a cash buyer, or when you’ve got an agreement in principle in place for a mortgage. Make it clear if you don’t have a place to sell, or you’re not mired to a property chain. Make the seller aware of any advantages that you have over other potential buyers.
5. Start the Bidding Low…Usually!
Almost all properties that are offered via estate agents and the typical avenues associated with house selling are priced above their value, or at the very least at the peak market rate. So it rarely makes sense to enter into the bidding process with a high bid. It’s almost always sensible to test the water with a lower bid and enter into a process of negotiation with the seller.
However, there are exceptions to this rule. If you know that the property has an attractive price then it can make sense to immediately offer the asking price, if the place appeals to you, of course. And houses in particularly attractive and sought-after areas, firstly, often retain their value even in depressed market conditions, and, secondly, disappear off the market rather rapidly.
So you might want to consider any hardball approach if you find the perfect home for you in such an esteemed locale.
6. The third Offer is Final
The longest process of bidding should involve you making an initial bid, upping your offer if it is rejected, and perhaps making a third and final bid if the deal hasn’t been secured by then.
It’s not advisable to allow the process of negotiation to drag on too long; a seller that is taking your offer seriously will be happy to complete within a reasonable timeframe.
Also, any improved offer that you make should be a serious one, it’s not really worthwhile – or possibly even ethical – to inch upwards in tiny increments. Be decisive during the negotiation process, and without temptations to increase your third bid.
Remember to keep a firm grip on reality and what you can afford. Particularly noting that interest rates may increase in the future (meaning that your mortgage rates could also rise).
7. Ask for Items to be Included
Finally, it’s always worthwhile to ask to include items from the house in a final sale price. Often the vendor won’t need these at their new home, or won’t want the hassle of moving them, and could be willing to let you have them in order to sweeten the deal. And it certainly won’t do any harm to ask.
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