Whenever you go to buy something, anything, you’re certainly hoping to get the best price for what you get. When you go to buy a house, this is even more important.
How good are you negotiation skills? In a real estate setting, these imperative skills really get put to the test. Buyers put out an asking price and sellers will push back - the back and forth tug-of-war is all part of the art of skilled negotiation. In any negotiation setting, every party wants the best deal for themselves, but in order for the deal to close, there has to be some sort of a compromise. The opposing parties involved have to meet somewhere and there’s potentially a whole lot of cash at stake.
In a real estate negotiation, there are typically two agents who represents the parties of buyers and sellers. It’s the most basic form of transaction. The seller’s goal is to sell, and the buyer’s is to buy - but a lot of the time it gets a bit murky in between. There’s often a great deal of push back with neither parties wanting to settle.
The real estate dance unfolds the same typically all across the board: The seller puts up a property for sale and viewings are scheduled for interested buyers. There will be a good and expected ratio between window shoppers and serious buyers, but this is all a part of the real estate game. If there’s serious interest from a buyer, the negotiations will begin once the seller receives a written offer from the buyer’s representation, the agent. Negotiations are usually handled and executed buy the agents for the the buyer and seller as they go back and forth in counter-offers. The counter-offers may be communicated via email, signed documents, and sometimes even through mobile and texting (as we have seen in hugely popular television shows like Million Dollar Listing).
The objective is simple on paper. There must be full agreement from both parties on the deal’s terms, inclusive of property price, time lines,contingencies, and any additional items and policies that correlate with the property’s transference of owners. People think that a negotiation only happens once or twice, but in reality, there is a constant flow of negotiation until you actually put pen to paper, sign on the dotted line and (thankfully!) close the deal. Buying a home is not so simple as making an initial offer and immediately paying that offer out. How much simpler life would be if that were the case though? Sometimes these negotiations and counter-offers can go back and forth for weeks to months before the seller and buyer are both happy and satisfied.
Here are things that you will have to keep in mind during the negotiation process:
What is the magic number? The whole negotiation basically comes down to the price. Buyers and sellers want to negotiate the best deal, the best price possible for them and this can mean polar opposite things for the two parties. Of course, the seller wants to get the highest price paid to them for the property and the buyer wants to pay the least amount possible to own the property. It’s like a balance scale that consists of a pivoted horizontal lever with arms of equal length, the beam, and a weighing pan suspended from each arm. Objects of a certain weight must be placed on both weighing pans to as close to the equilibrium as possible, otherwise the scale will just topple heavily to one side. In a negotiation deal, the final price needs to end up somewhere in the middle for both buyer and seller to be satisfied.
Buyers don’t want to over payor price themselves out of a resale in the future and sellers want to ensure that the deal makes sense for them financially and won’t put a whole in their pockets.
Closing costs are fees paid at the closing of a real estate transaction that are associated with your home purchase and home loan,and can be incurred by either the buyer or the seller. Many of the fees that make up closing costs are negotiable. Closing costs can vary widely based on your property market, such as where you live, the property you buy and the type of loan you choose. Some of the fees that may be included in closing costs are:Application fee, appraisal, attorney fee, escrow fee, courier fee, credit report, home inspection, homeowner’s insurance, property tax, transfer taxes…just to name a handful.
Homeowners can negotiate with the seller on who pays these closing fees. It’s really case by case, and sometimes the seller will agree to assume the buyer’s closing fees.
Closing Point/ Closing Date
Closing point/closing date is when the title of the property is transferred from the seller to the buyer. The closing date is set during the negotiation phase and is usually several weeks after the offer is formally accepted. The closing date is one of the many factors that is negotiable during the offer and acceptance of a purchase contract. When making an offer, the buyer will include a closing date and depending on the seller’s circumstances,it may be acceptable or they may counter with terms that work better with their schedule.
Sellers may counter your proposed closing date in cases when they may need to move out quickly, they may want to put the date earlier.
There are occasions when (if) the closing date just won’t work for one party, it can mean the collapse of the deal altogether.