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.