There are books galore on the art of negotiation and they all have excellent information and each one has a definite spin on the time-tested art of negotiating. Basically, everything in life is negotiable, but you have to be ready and willing to deal especially in land and real estate.
First, everyone expects to negotiate at some level in real estate so you aren’t offending anyone like you might be if you walk into a retail store asking for a better deal than what they are offering at Old Navy. Nevertheless, you would be shocked to learn how few people are up for the fight for fear of losing the deal or coming off as a Jerk.
First, you need to due your research or due diligence on the property and calculate all the costs associated with the transaction plus what it will cost you to have the property perform for you its highest and best use. Once you have this number you can begin negotiating down from there.
Second, be aware of the current market conditions. Right now, conditions are favorable for buyers as there are more sellers than buyers and prices are depressed. If your seller isn’t realistic about the market then do not even bother wasting your time on protracted negotiations. If they are being reasonable then proceed. When it was a seller’s market, you had to be more choosy and work harder to find the right transaction as there is more competition and in fear of losing out a tendency to overpay.
Make an offer and if it’s low explain why it’s so low. Don’t just make a blind low ball offer and expect the Seller to quickly counter. A little extra emotional labor on your part about the offer will go a long way towards a win-win final price.
Wait. Wait and then wait some more. Sometimes you won’t hear back from the seller for two weeks and this is fine. Be patient and then make another offer if they have not countered your first offer within two weeks. Again, explain your offer.
Be prepared for the counter up from the Seller and then start the process of if I give you a higher price on my offer I will also need a lower down payment, lower interest rate, better terms, etc. Don’t give without getting something. If it’s just a simple cash transaction then see if they will pay more of the closing costs or some other concession.
Once you settle on the price make sure you have not gotten overly emotional over the deal and paid more than you wanted because you had to have the property. Just pass and know there will be another deal down the road. There always is. Never overpay. Ever.
Let me know if this blog post has been helpful.
