How does the negotiations go in buying real estate

Question

I am in an extremely tough market in California and the realtor that is sending me deals is a family friend who is hard to approach. I am analysing deals and none of them make sense. No cashflow. no discounts, but they might work if they lower their price.

The problem is my realtor and I need a new realtor and also need to find out, How is an offer submitted that is below the asking price? How do negotiations go? do I just call the realtor number on the listing? How low is too low to offer and when do I just say that is just too far off from where it would make sense.

Thanks

Jason Thompson · Answer

@Burr Guy @J Scott Welcome to the wonderful world of investing Burr, you should read or listen to "The Book on Negotiating Real Estate" by J Scott, Mark Ferguson, and Carol Scott. It's very useful and an essential tool for learning to negotiate like a professional. All the best Burr, have a great day.

Wale Lawal · Answer

@Burr Guy

If you are keen on buying a home now, there are ways to make sure that you get a good deal. Here are a few quick tips to negotiate for the right price.

Be clear from the beginning

A seller is never too willing to negotiate. You should initiate the negotiation. As a buyer, your first priority should be to find and finalise a property that fits your budget. Set the final budget and other requirements then bargain well.

Do not be eager

The moment you enter the house, even if you fall in love with the property, stay calm. Do not give away how keen you are. Be ready to walk away at any point. Do not worry! This will not ruin your prospects. At least be firm on what you are asking for, which is, the offer price. Avoid imagining how your belongings and furniture will fit into your new house. The seller will become sure that you have made up your mind on buying this property. He won't budge.

Be realistic

Offering a low price is sensible. Let them know that you are a serious buyer who will actually complete the transaction. Ask for a price which is negotiable, and that's how the negotiation process starts. If you start with too low a price, the seller may become disappointed. The chances of calling off the deal will become stronger. If you are good enough with your research and learns that the property is fairly priced, then offer just a little less than the listing price.

Find out why the house is on sale

If it is a foreclosure property, it makes sense to bargain. If a home is significantly overpriced, it is quite possible that the property will be in the market for a long time. So, it is wise enough to research on the property and find out whether the house belongs to any of these two categories. If it is, avoid buying such properties, because it may not be a good deal for you.

Be open about asking other favours

If the seller doesn't want to bring down the price, then instead of sticking to your offer price, ask for other things. Be creative with your offer, and ask other concessions. The owner may want to contribute to other repairs and maintenance or other similar costs.

Be flexible

Sellers will often accept a slightly lower-priced offer if it comes with perfect settlement terms. So, instead of being firm on the pricing, try to compromise a little. Needless to say, getting a perfect house is a dream. So buyer should stop hunting for the perfect house at the perfect price. You may have to compromise on features, in terms of location, size and price. You will be a step ahead of closing the deal if you are flexible enough while negotiating the price.

Close the deal

If everything goes well, try to close the deal as early as possible. Do not forget there are other potential buyers in the market. They may be waiting to buy the same property.

All the best!

Scott E. · Answer

Quite a few questions in your post. I'll answer them like this...

-The problem is my realtor and I need a new realtor: Yes you need a new realtor. Start asking around. Realtors are a dime a dozen. Meet a handful until you find one that aligns with your objectives and sounds prepared to help you accomplish your goals.

-How is an offer submitted that is below the asking price? You tell your realtor "I want to submit an offer on this place for $XXX,XXX. They will write up the contract, have you sign it, and submit it to the sellers agent.

-How do negotiations go? You and the seller perform all of your negotiations through your real estate agents. The buyer agent and the seller agent will talk details over the phone, and formalize the details in writing on the contract.

-Do I just call the realtor number on the listing? You can. I have bought several deals this way. But if you are a beginner (which it sounds like you are) then you should have a buyers agent representing you on at least your first couple of deals.

Eliott Elias · Answer

Point blank, you are a less desirable client to work with. The realtor will have to put in 3x the amount of work they would have than for a retail client. You two will be analyzing many deals that you will not close on and the process is longer. Hire someone who is new, eager, and willing to dedicate a lot of time to you.

Nathan Gesner · Answer

Most REALTORS have no desire to work for someone that low-balls every offer and may never end up buying a property. They aren't getting paid until you actually buy. Your offers are probably so low that the REALTOR knows she's wasting her time even throwing them out there.

You can only offer what you think the property is worth to you. It may be worth much more to others, which is why your offers get rejected. If you can only afford $560,000 to make a property cashflow, but it's worth $620,000 to others, then your offer is not going anywhere and you've just wasted everyone's time. My point is that it's smart to know what the value is for you, but you need to be realistic that you are low-balling people that aren't desperate to sell at the price you want so they will rightfully be . . . bothered.

REALTORS are more likely to play your game when you've successfully purchased multiple properties through them. I work with an investor that really low-balls, 30-40% below market every single time. However, I've helped my buy 7-8 properties because he knows how to low-ball and make it happen.

Nicholas L. · Answer

@Burr Guy

did you sign a contract with the realtor you're working with?

offers on an MLS property should come from an agent - listing agents won't want to talk to you

offers below asking price - depends on too many factors to give an answer

How does the negotiations go in buying real estate

How does the negotiations go in buying real estate

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