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Playing Dirty in a Buyers’ Market

by FSBOJane on December 7, 2007 · 10 comments

  

Nine Ways to Turn a Solid Walkthrough to a Solid Negotiation

If you’re new to real estate investing, trying to determine how/when you should buy a place you plan to resell, rent, or rehab, these tips will guide you through the rough spots of deal-making:

1. Do your homework
If you know the specific location where you want to buy, compare listing prices of similar homes in the area. In this buyers’ market, you can afford to make a lower offer than the listing price. Yet keep in mind that insultingly low offers will only make for bitter sellers, so plan to make as fair a judgment as you can, keeping in mind that, right now, the ball is in your court.

2. Know what cards you hold
Talk to mortgage institutions before you start negotiating. Knowing exactly what you can afford will guide you to properties within your budget, meaning you won’t waste your or the seller’s time. Also, being prequalified immediately makes you a more serious buyer and thus more attractive to sellers.

3. Ask questions
Bring a standard list of questions to ask for every home walkthrough, but do your research and ask very specific questions on the nuances of each home. What are the maintenance costs like? What appliances need to be updated? This can all affect your offer, if you decide to make one.

4. Engage the seller
“Oh, I love these window treatments and that refrigerator. Can these stay with the home?”
You may have already known that the treatments and appliances stay with the home, but if you are visiting with a home seller, asking “dumb” questions will engage the seller to talk in greater detail about the extras and amenities offered with the home. The more you know, the more negotiating power you will have.

5. Use “positive manipulation”
Manipulation isn’t always bad–you know that the seller wants to sell the home. Understand the selling motives, and let them work in your favor. If you know the sellers are moving because of a job, they will want to sell as soon as they can. When time is of the essence, offer them expedience and you might be able to make an offer in your favor.

6. Call their bluff
Take a closer look at the home. Notice wear and tear, scuffing, and the overall condition of the home. If the seller claims “new” carpeting and you can see that it clearly isn’t, they could also be bending the truth about much larger issues. Don’t buy Funny Farm when there are countless new and impeccably maintained homes on the market.

7. Always be willing to walk
While you may not literally be “walking away” from the home, many sellers are certainly eager to grab your attention if you express a mild interest in the property. If they know that you are interested, but more than willing to look elsewhere, they will use what they can to grab your attention. Lowered prices, add-ons, and included amenities can sweeten any deal.

8. Act fast
While it’s comforting to know that you’re buying in a buyers’ market, your ideal property is still liable to be taken by someone else. If you find the home that you really want, don’t hesitate to make the offer. While the odds may favor you, don’t forget that there still are other buyers to compete with.

9. Know that your best ally is yourself
After you’ve gained all the knowledge you can about the home, the seller, and your own finances, trust yourself to make the best decision. Knowing that you have a multitude of choices means that you deserve to find your dream home! Playing “dirty” really means that you should be a savvy buyer, with lots of knowledge (and the favorable market) on your side.

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{ 8 comments… read them below or add one }

John Wilberforce December 7, 2007 at 6:35 am

Thanks for the tips! I can sometimes be quite bad at negotiating, and need to work on my skills in that area a bit more. Hopefully with your tips next time I’m looking to buy I won’t be stuck with a bad deal!

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tyler moxley December 7, 2007 at 10:27 am

Being able to ‘walk away’ is always important! It may not be what a buyer wants to do, but if they want the house bad enough, they will do what it takes.

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The Real Estate Schmoozer! December 7, 2007 at 11:32 am

Very good points. Tyler is correct. You must be able to walk away. As a broker, I try to coach my clients prior to viewing it, not to get emotionally attached. When the untrained and emotionally attached property purchaser walks into a property and immediately places all their furniture and personal belongings into a property in their mind, it’s tough to walk away even when it’s the right thing to do.

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Learn to Speak Spanish December 7, 2007 at 10:49 pm

Good stuff. Negotiation is really an art. But like anything else, it can be improved with practice.

One trick my step-father would use on an agent that was trying to get him to buy at an unnecessarily low price, was to tell him or her that he would gladly accept the deal, if the agent was willing to take a 50% cut in the agent’s fee.

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Ultimate Real Estate System December 8, 2007 at 10:14 am

I really like your #4 Tip to engage the seller. However your #7 and #8 tip may contradict each other. “How to act fast if I have to walk away.?”

I personally think certain tips will need to apply to certain situations.

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Rebecca December 11, 2007 at 2:11 am

The tips shared by you are really something that will benefit a lot of possible buyers. I must confess that I am someone who is really bad in the negotiation skills. But, the tips shared by you are something that are helpful. A few months back we bought a house in Seattle region. First I did the search on resortscape and then I decided on a house, they put me in contact with an agent. I must say here this guy turned out to be real help. He sent us the video of the house along with some photographs. I must say it was through his help that we got a very fine deal. This saved us from a lot of unnecessary worries. I really want everyone to see my house, so I am leaving the link.( http://www.resortscape.com/default.aspx?ct=D&pid=23058&utm_medium=linktous&utm_source=PT ).

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Rick Marnon, Howell December 12, 2007 at 8:04 am

I started investing a while back but have put it on the back burner due to a number of things going on, but I am now back in the market. This statement is so very true. You can think that you are making a great investment, but if you don’t do your homework you can put yourself in a really bad position.

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Rachel March 22, 2008 at 12:33 pm

Negotiation is a big part of the real estate picture, in our market today the price you offer today should reflacte the market prices for the next 6 month

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