Negotiating a real estate deal

So, you’re a buyer and you’ve found the house you want to buy, or you’re a seller who finally gets an offer on your home. Where do you go from here? Negotiating a contract is a delicate process, and can range from simple and pleasant to nail-biting and nasty. Most fall somewhere in between.

The truth of the matter is that there is really no “formula” that works for negotiating a deal. There are many factors, and it’s important to know that no two transactions are exactly alike. The circumstances of both the buyer and the seller dictate a lot of the process. How long has the house been on the market? How fairly is it priced? How anxious are the buyers?

From years of experience as both a Realtor, and as a buyer/seller (I’ve moved a lot!), I have found that everyone is different in how they like to negotiate. I always supply my buyers (and sellers) with accurate, current comps, so we have all the data we need to make an informed decision.

Some clients get obsessed with numbers and stats, creating spread sheets and graphs to show every different scenario, and how they came to the decision to make a particular offer. Being somewhat of a numbers nerd myself, I actually like all of that. Some folks prefer to just throw a number out there and see if it sticks. In essence, there is a “gut” number – and maybe terms – with which they are comfortable.

What I do know, is that all of the data analysis in the world will usually only get you to a certain point. Once the buyer and seller get in the same ballpark, based on whatever methods they used, most of that goes out the window. At this point, the negotiations tend to be more emotional, and they usually come down to who is willing to give a little more to make it happen.

Sellers tend to be emotionally (and financially) invested in their properties, so this is the point where it all becomes very real. The same can really be said for a buyer, as they can suddenly get to a “be careful what you wish for” scenario. Some clients have that “need to win” personality, and they will usually want to have the last word. If you realize that, the other party can learn how to give on something small and not as important to them, in order to make everyone feel like they “won.”

With the Atlanta real estate market picking up, a scenario we are once again encountering is the multiple offer situation. This can be tricky, and needs to be thought out carefully. Many buyers are simply scared off by this prospect, assuming that they have lost all bargaining power, which is not necessarily true.

Once you know that there is another offer (and the listing agent should convey that to the buyer’s agent), what’s important is to put your best foot forward. That doesn’t necessarily mean you have to go with your top dollar offer, just one that will hopefully compete, and yet would let you walk away from the home in question with no regrets if the sellers choose another offer. If the seller chooses to respond to your offer, negotiations are still open, and you never have to accept anything more than you’re comfortable with.

An extremely helpful hint in this type of scenario is to make your offer as “clean” as possible. When a seller is presented with two offers, even if the price is the same, or similar, they are going to look at the total picture before making a decision. The strength of your finances (putting more money down, paying cash, etc.) usually carries a lot of weight, as well as the time frame for closing.

What you don’t want to do is put in a lot of special stipulations or contingencies. A well-informed seller will usually be more interested in a solid, clean deal that may have to get negotiated money-wise, rather than one with a higher initial offer price that is full of contingencies or other demands.

Note that for the purposes of these example scenarios, I’ve described circumstances dealing with a homeowner, not a bank or corporate entity. Negotiations are completely different in those situations, and that is really a whole topic unto itself.

As you can see, negotiating a deal can be somewhat tricky, but armed with the proper tools and counsel, it can be done efficiently, effectively, and with a “win” for everyone involved.