Preparation, mental toughness and negotiating strategy play key roles in the home purchase process, and as a home buyer you need to master them.
The L.A. Times offers us some tips to help:
Knowledge is power.
Before making a purchase offer, learn as much as you can about your local housing market and the homeowner’s motivations for selling.
Ask questions about the sellers, such as why they’re selling, how long the home has been listed for sale, how soon the seller needs to sell, the mortgage balance, how much the seller paid and any defects in the home.
As the buyer, you’re in the driver’s seat, so obtain all the knowledge you can.
But at the same time, be careful to reveal as little as possible about your personal situation, such as your income, maximum down payment, highest price you’ll pay for a home and how soon you want to move.
And caution your agent not to reveal any confidential information to the seller or listing agent.
Ask if the seller has a deadline.
Time is critical in negotiations. Find out if the other party has a specific deadline. If the seller is under time pressure, use it to your advantage.
Usually buyer or seller or both have deadlines. If the local home sale market is hot, the competition of other buyers might push you to act quickly once you decide on a specific home. But don’t be rushed into a purchase.
Keep a poker face.
No matter how much you want a specific home, avoid showing your emotions. Pretend you can take it or leave it. Once the seller (and the seller’s agent) discover you absolutely must buy a home, you lose your negotiation edge.
Adopt the “he who cares least wins” attitude.
Closely related to hiding your emotions is adopting the “he who cares least wins” negotiation strategy.
Ask yourself, as a buyer, “What will happen if I don’t buy this home?” The world probably won’t end. Maybe you’ll find a home you like better at a lower price. But don’t be afraid to walk away. There’s always another home for sale.
Watch out for real estate “auctions.”
If you are buying a home, watch out if the realty agent says, “If you want to buy this house, you’d better make your purchase offer quickly because there’s another buyer interested in this house.”
Assuming there really is another interested buyer, this is a setup for a real estate “auction.” Often, there is no second buyer. If there is, don’t let him influence you when making a purchase offer.
Make your offer based on your superior knowledge of the local home prices and the seller’s motivations for selling. If the other buyer gets the house, he probably overpaid for it.
Adopt a “win-win” attitude.
Buyers should avoid taking unfair advantage of the seller, even if the seller is facing a difficult situation, such as a pending foreclosure, divorce, unemployment or job transfer.
With a win-win attitude, the buyer offers a fair price that the seller can realistically accept. When you meet the other party and his or her realty agent, be sure to congratulate them on their successful negotiations.
