When it comes to real estate negotiation, it is more of an art than a science. Everyone is looking for the best deal, and how to negotiate house prices as a private buyer or seller makes a big difference in the final result. Understanding the market is only half the battle. Being fearless in asking for what you want in a respectful but firm manner will open many doors for you. The best realtors understand the ins and outs of real estate negotiation—That’s why we are going to share the secrets to securing the real estate you want.
Insider Real Estate Negotiation Tips
Let’s get right to it! Effective real estate negotiation can make or break your deal, so it’s wise to be prepared and informed when you begin the process. These tips used by the best realtors will put you in the driver’s seat. Even if you partner with a real estate agent, it’s good to know best practices so that you are just as informed as your realtor. These are insider tips for excellent real estate negotiation that most people are not aware of. Here’s where to start:
- Escalation clause – This is a secret weapon of realtors when negotiating real estate deals. It is a clause that allows clients to win multiple offers by indicating the intention of paying a certain amount over a seller’s highest offer without exceeding a specified price. It is highly effective.
- Assess and identify – What are you trying to accomplish? When you start the real estate process, you’ll want to assess what type of negotiations you are engaging in. Whether you’re negotiating a win-win compromise or a deal for yourself, knowing what you want to accomplish is the first step to succeeding in real estate negotiation. Next, you’ll want to identify value-creating moves or things that are not costly to give but valuable to receive for the other party.
An example of this is to provide an offer under the selling price and give the seller a specified amount of time to find a better one. In the offer, you indicate that the seller must close on the house if he has not found a better offer after the time passes. But if a better offer is presented, you agree to keep looking. This is effective when you are confident that you have a good understanding of the housing market in your area.
- Fiduciary duty – A realtor must take their fiduciary duty seriously. This means fighting for the best price possible. Nothing spoils a deal faster than accepting the first offer right away. Negotiating a home price is like dating. You don’t want to secure the deal too quickly, or the relationship may not last. At the end of the day, a buyer doesn’t want to feel like they paid too much, and a seller doesn’t want to think they undersold their home. Understanding your fiduciary duty is a delicate balancing act.
- Subtle encouragement – No one wants to be coerced into buying a home, but there is nothing wrong with subtle encouragement. During a savvy real estate negotiation, you want the other party to believe they are in control. By using affirming language, you’ll be able to increase compliance with your offer. An example of this is by using phrases like, “you probably won’t but. . . “ or “you’re free to say no.” These will put the ball in the other party’s court without high-pressure tactics.
- Win/win perspective – Ideally, when you know how to negotiate house price deals, you use a win/win perspective. The best realtors are focused on ensuring everyone is satisfied with their part of the deal. Inexperienced realtors make the mistake of treating a negotiation like a battle. This is not only annoying to the listing agent but damaging for the client. Instead, it’s best to focus on creating solutions to challenges faced while negotiating real estate.
- Start with market value – Seasoned realtors start real estate negotiation by calculating the property’s value and not the asking price. That way, a realtor is negotiating from an informed place, so they are intentionally strategic when placing an offer. An excellent strategy to use is to present an offer that is a little lower than the minimum they are willing to accept. By doing so, the seller must consider taking a little less than expected or present a counteroffer to avoid losing a solid buyer. The idea is to get the process of negotiations started and active.
- Learn persuasion – The art of persuasion comes down to psychology. There are six rudiments of persuasion. Use these powerful real estate negotiation tips with the following concepts:
- Reciprocity – People are more willing to give when they are receiving.
- Scarcity – Persuade people to buy through creating scarcity
- Authority – People are more likely to comply when requests come from a perceived authority figure.
- Consistency – People will gravitate towards things they know will remain consistent.
- Liking – People like to communicate with others they feel connected and similar to.
- Consensus – When you’ve developed a reputation as a great realtor, people will be more willing to work with you.
- Use data – By using data to your advantage, you’ll be in the driver’s seat during a real estate negotiation. You want to have more information than the other side, so you are more likely to get what you are looking for out of the deal. The data you collect should include:
- An understanding of the market time
- Average market time for similar homes
- Average overall market time
- Comparable properties, markets
- Room counts
- Square footage
- Homeowner association fees, if applicable
- Why it’s being sold
- Negotiate by phone first – It is recommended to negotiate over the phone first since things can get messy the further along the real estate negotiation process goes. Once negotiations go to paper, it is too late. While having the discussions over the phone, start writing out the contract to keep things simple and transparent. Receiving multiple offers can create confusion, so keeping contracts organized and simple is greatly appreciated and will make the process smoother.
- Meet in person – One of the most critical aspects of real estate negotiation is to meet the seller in person eventually. Rather than waiting for the open house, schedule an appointment that’s convenient for both parties on the weekends. This will help keep the negotiations smooth and make it more likely for them to choose your offer. People do business with people they like. Without meeting you, they will likely choose the highest offer they receive. By meeting in person, they will put a face to the name and may choose your offer.
We are Experts at Negotiating Real Estate
These real estate negotiation tips can be helpful when buying or selling your home on your own. When you want a committed partner in your real estate search process, Jeff Barchi is one of the best in the nation. As a multiple award-winning top real estate agent, Jeff Barchi knows how to negotiate house price deals in your favor.
For over 20 years, he has served Scottsdale, Paradise Valley, and surrounding communities. With a keen understanding of the housing market and extensive network, The Barchi Team closes an average of 50 transactions with a 1% higher sales price every year through effective negotiations. When helping potential buyers secure the American dream, Barchi averages 5% below the asking price!
Give us a call today to help you negotiate and secure your next dream home in the Scottsdale area!