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Questions
You Should Ask Yourself Before Negotiating
Good
cop-bad cop. Nickel-and-diming. The waiting game. Upfront and honest.
There
are plenty of different styles and strategies when it comes time to
negotiate your new home purchase, but before you sit down at the
bargaining table and before you make an initial offer, you should
prepare yourself. Here are a few of the questions you should ask:
1.
What kind of market is it? If
it’s a buyer’s market, you may have a little more leeway in getting
a better deal. However, if it’s a sellers market, you may have to
concede more to the seller. Although the market conditions don’t
necessarily dictate how your negotiations will go, the general state of
the market will often be a large bargaining chip—fairly or unfairly.
2.
Did you get an appraisal? When
considering an appraisal, remember the adage “you get what you pay
for”. If you get a very detailed appraisal, it may cost you a little
bit more, but that extensive knowledge may be very helpful to you in
determining the home’s value.
3.
Are you pre-approved? A
pre-approval shows the seller that you ready to buy and that you have
the backing of a lender.
If you and the seller know ahead of time exactly how much you can
afford and when you can close on a home, you’ll be much better
prepared.
4.
What about the comps? Have
your agent run an analysis of similar home sales in the area and compare
these to the house you’re considering. You want to take into account
factors such as location, the condition of similar homes, and additions
or renovations. By looking at comps, you’ll be able to get a decent
idea of a good first offer.
5.
Does the seller have other offers?
Much like the current conditions in the real estate market,
whether or not the seller has other offers will play a part in
negotiations and purchase price. Often, the presence of other possible
buyers may be your biggest roadblock in closing the deal. In that case,
see #6...
6.
What are your limits? Make
sure you set solid limitations in terms of how far you’re willing to
go to get your new home. If the seller is not willing to lower the
asking price or compromise on the terms, you need to know when to say
“thanks but no thanks.” Don’t overextend yourself or you may
regret it later.
7.
What is important to the seller?
Ask your real estate agent to check with the seller’s agent to
see what the seller is looking for and what terms are important to them.
Price? Net proceeds? Date of closing? If you can find out what the
seller wants, you’ll be able to make a more attractive offer.
8.
What is important to you? Similarly,
you need to decide what is important to you. Hopefully, your needs will
mesh with the seller’s needs and you’ll be in a prime position to
make a deal. Also, you need to figure out where you’re willing to
compromise, if needed.
9.
Have you considered all scenarios?
Try to avoid surprises when you negotiate. Although it’s
impossible to predict what will happen once offers and counter-offers
start being made, you should make a list of things that could go
wrong—such as the seller refusing to make any repairs or asking for a
closing date that’s too soon—and try to come up with possible
solutions.
10.
Are you rational? Although
it can be difficult, don’t let your emotions come into play. You may
have found your potential dream home and you’re bound to be quite
excited, but try to be rational. If you lead with your heart instead of
your head, you may end up paying more for the house or compromising
needlessly.
Of
course, there are other questions you should be asking yourself, but if
you take the time to answer the above questions, you’ll have a firm
starting point for making an initial offer and beginning negotiations.
And as always, make sure you work together with your real estate agent
to ensure a smooth process.
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