Step 7 – Negotiation Strategy
When you find the right apartment, the next step of course is to make an offer. The offer includes the price, closing date, the amount of the purchase to be financed if any and mortgage contingency, flip tax if any, inclusions and exclusions.
If you making an offer directly to the seller’s broker do not assume that your position will be conveyed to the seller and keep in mind that the broker’s fiduciary duty is to the seller not the buyer.
When making an offer below the asking price make sure, it is reasonable and that your broker can support it with comparable sales. This communicates that you are serious and want to be perceive as being fair even though the seller does not agree with you.
Even if you consider yourself a good negotiator, it is better to rely on the expertise of your very experienced broker who has done countless successful negotiations over his or her real estate career. Here are some tips to help you!
- Don’t’ talk too much in front of the seller’s agent. You may give the agent reason to believe that you can afford more, or you may disqualify yourself as a buyer by underselling your qualifications. Your broker will be able to present your net worth statement as even the most educated buyers often leave out assets that they did not realize could be counted.
- Do not present your best offer first. The other side will assume this is your best offer and will just counter leaving you with nothing else in reserve to counter back
- Have your broker draft an offer letter, which should be carefully crafted explaining your offer and the reasoning behind it, reference it comparables and the present market condition. This communicates sincerity and that you are a serious buyer not a buyer who is placing offers on 10 properties to see which one sticks!
- Do not ask for everything at once with your first offer especially if you are making a low offer, which is better understood alone.
- Do be nice! Residential transactions are very emotional. You will do much better in the negotiations if you are not abrasive. Make sure you hire a broker who does not use bullying and high-pressure tactics.
- Do not let a deal get broken over small things such as not including a certain light fixture.
Strategies For Winning A Bidding War
- Offer all cash if possible
- Act interested! Let the seller know that you love the apartment not acting as if you do not care and point out flaws.
- Have your broker keep in frequent touch with the listing broker so you know when the status changes such as another buyer changing his or her offer to all cash or raises his or her offer.
- Most people bid in round numbers. Bid in an odd number so you will come in just above a close offer. I.E. Instead of $2,450,000 come in at $2,455,000.
- Put a deadline in your offer like 48 hours. The seller may be more compelled to take your offer.
- Make it personal! Write a letter about yourself, your intentions for the apartment and why you love it. In close bidding, war situations “love letters” such as this can make a difference!
- Accommodate the sellers’ special needs such as a quick closing, buying the furniture, or letting the seller stay in the apartment for a period of time after the closing.