The old saying is that in real estate, everything is negotiable. But is it really?
When you go to buy a house, you’re certainly hoping to get the best price and terms. To do that, you need to know when to start negotiating and when to stop. (Did you catch that last part? WHEN TO STOP negotiating? It is just as important). It begins with being familiar with the market, down to the neighborhood and maybe even the street.
This “familiarity” stems from being an experienced Agent. PLEASE keep in mind that an EXPERIENCED AGENT should be measured in contracts written and closed. Agent A has been selling homes for 30 years, seems experienced, but is only selling 2 properties a year. Agent B has been selling for maybe fewer years BUT closes on 2-3 homes a month (or more) and is more likely to have their finger on the pulse of the market. Experience in transactions over time counts, not just length of time in the business.
The local market condition is the single-most important factor in negotiation strategy. And just like the weather, the landscape is a crazy quilt of micro-climates. Markets vary from city to city, neighborhood to neighborhood. As your Agent, I would know the neighborhood well and be able to tell you what kind of market you are in: a buyer’s market, a seller’s market, a balanced market or a market where you are likely to become embroiled in a bidding war.
To define: If there are more homes for sale than people who want them (Buyers Market), there is usually more room for negotiation than if there’s a shortage of inventory (Sellers Market as it is called… OUR CURRENT MARKET is a Sellers Market with a trend towards a Balanced Market), as is the case in many desirable neighborhoods.
“Deals of the century are gone,” It is not 2009 anymore.
“The deal of the century is: ‘I got a good property that meets my needs.’
Stay on BUDGET, home in good condition, and works with your financing. This is the new victory for buyers.
Don’t buy a home and negotiate with outdated, stale techniques. It is not the 1980s or the early 2000s anymore. If people are offering advice, make sure they have been buying and selling Real Estate in the current market . Otherwise you stand to lose…A LOT!
Things to Avoid:
1. DON’T use the wrong real estate agent. Just because your sister’s college roommate’s friend just got a real estate license doesn’t mean she’s the right agent for you (see EXPERIENCE above). Try vetting agents and looking for someone who does real estate full time and knows the local inventory. Sellers and other Agents are human. You can lose an offer if you are using an Agent who is not responsive to the Seller, doesn’t know how to file the property paperwork, and is not familiar with protocols. People want to do business with people who are not going to be a burden in the transaction. It’s true! If interviewing an Agent: Request the agent’s sales data (Experience Indicator) and find out how he or she communicates. Do you like “TECH”? Does your Agent? Ask questions like these to gauge the agent’s tech-savyness: “Is it OK if I text you? Is it OK to DocuSign or DOTLOOP things? If I can’t make an open house on Sunday, can you shoot me a video?” If you prefer to check texts and emails on your phone, you may not want an agent who insists on faxing contracts.
2. DON’T shop before you get pre-approved. And we don’t mean those fancy pre-quals! What your letter says, does not matter, it is the quality of the underwriting done by your lender. (We see you fancy Pre-qual, we see you!) Before you get serious about buying real estate, find out how much mortgage you qualify for and get a preapproval letter from your BANK (talk to me about Bank vs Brokers). Many agents won’t even take buyers to showings until they have a preapproval letter. Sellers won’t accept your offer and you have not taken the time to establish your budget and understand a mortgage program.
3. DON’T max out your spending power. BUDGET, BUDGET, BUDGET! Shop for a home based on it’s anticipated monthly payment, NOT purchase price. Qualifying for a half-million dollar mortgage does not mean you should buy a McMansion. I have seen people, especially first-time buyers, make this mistake. It’s wiser to be a little more conservative. Homeowners have additional expenses such as property taxes, condo fees and maintenance that renters do not, so some first-time buyers fail to budget for these extra costs and assume they can afford a monthly mortgage equivalent to the rent they paid. Some dual-income couples choose to qualify based on just one income to give themselves a financial buffer. BEST TIP: Understand Price vs Cost of a home.
4. DON’T take advice only from outsiders. Parents, relatives or friends who haven’t bought property in the local market may not understand local pricing and market conditions. Parents or in-laws who own houses in the suburbs (OR let’s say New Hamshire…) may also have unrealistic expectations about what the equivalent amount of money buys HERE. Be careful about people that are giving you advice. Outdated and stale techniques will cost you time in the market. The market could pass you buy as you are not negotiating to the current market condition. Prices and rates are on the rise…..time is money!
5. DON’T skip the home inspection. No, just NO! I cannot say “no” enough! Home inspections can help alert potential buyers to problems such as structural issues, faulty wiring and other problems a layperson probably wouldn’t spot. I am an Agent, not a home inspector. BUT I am an Agent who has been through over 200 home inspections. I know what to look for UPFRONT and before making an offer. Examples: What are things we need to ask the Seller about? What are things we may want to write into our offer to be repaired PRIOR to closing? What could impact ability to finance or get home owners insurance?
The first time we see a home together it is going to take approximately and hour. Why? I am going to walk you through the home. What is a fascia board? What is flashing? What is a cement cap? What are the structural elements in the basement? What is the difference in 100 amps of electric with gas vs oil heat? Condition is property is important to you (AND YOUR MORTGAGE HOLDER!) Price of the home is also a function of the current condition. You don’t know the current condition? How can we establish a price? You’re not working with me to just write contracts. I am here to walk you through the process… walking takes time!
6. DON’T overdo contingencies. While home inspections are recommended, some home buyers include so many inspection-related contingencies that it can scare off the seller and his or her agent. Some buyers are nervous, so they’re looking for extra ways to change their mind and walk away. That’s where I come in! You can write a competitive offer without all these extra things that scare away a seller so that you never get an excepted offer! As your Agent I will make sure you feel confident your interests are protected.
7. DON’T get too attached to one property. In competitive markets, you may have to put in offers on several properties before one is accepted. Some buyers get so infatuated with one property that a rejected offer hits them hard. It’s OK to feel nervous, but it should be an excited nervous! You need to be able to fall in and out of love during a home search. If you find a home that you think is perfect for you and you don’t get it, you can’t stay down too long. You have to recognize that wasn’t the house for you. BEST TIP: Make an offer on the home you are afraid someone else will buy. That’s how you know it is “your home”.
Thinking of making a move? Keep us in mind. For all your Real Estate Decisions…think RED!
Check out NEGOTIATIONS 101
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