Achieving Balance in Buyer/Seller Negotiations

During the home sale process, both the buyer and seller need to protect their interests. In most cases, offers are fair and equitable. Sometimes, however, the offers are less than fair and careful negotiation can bring both parties to a point of satisfaction with the buyer’s offer. The counter-offer is extremely important in this negotiation process.

But how can the buyer and seller manage to strike a harmonious agreement that protects both sets of opposing interests? The answer is that it depends.

Negotiation is not a strong skill for most people, specifically when it applies to haggling over purchase prices and terms for… well, anything. However, it is possible for both buyers and sellers to learn to negotiate effectively and to compromise on some of their less-important requirements in order to finalize the home sale transaction.

There are three parts to any successful negotiation: education, preparation and honesty. Here we will consider them one at a time.

Education

Education refers not to what you read about prior to looking for a home, but rather the specific details of the home that you plan to purchase. You need to do your research and gather information as you would for any major investment. Some of the things that you will need to evaluate through education include:

• Market Value

  In order to offer a price that is in line with the fair market value of the home, you must know what the home is worth according to the current economic climate and the neighborhood in which the home is located. Your realtor is one of the best resources for getting the information needed to assess a property’s market value. He or she can provide you with what is known as a competitive market analysis, or CMA.
  
  A CMA provides information based on actual home transaction statistics and what homes are selling for in the exact area where you want to buy. The information is not based on opinion. CMAs provide a list not only of the homes that have sold, but also of those currently being offered for sale, including their listing prices and listing dates. This information will give you a very good method by which you can judge whether the asking price is fair in light of recent sales history.
  
  If you plan to seek a CMA report before making an offer, do so before you even begin looking for a home. The reason for this is that if you are working with a listing agent and not a buyer’s agent, there is a chance that providing you with a CMA later would result in a conflict of interest for the agent.




• The Home’s Condition

  Part of the education process is becoming intimately familiar with the home that you intend to purchase. You cannot afford to skip a home inspection. Before finalizing the purchase, you need to know whether any major improvements must be made prior to occupancy. Furthermore, the CMA report will allow you to assess the home you are buying with the knowledge of its condition and that of the other homes that are listed on the report. This is great knowledge to have and it will help you to formulate a fair offer for the home.




• Amenities

  In some areas, amenities are what drive the selling price of homes, but in other areas amenities matter little. For example, in warmer climates a swimming pool is an amenity that most people desire. In areas with more seasonal climates, pools are generally considered to be luxury items and will increase the home’s value when they are attractive and well-maintained.
  
  Remember that amenities are nice, but most of the time you will not need to consider them in determining the offer price.




• Seller Motivation

  When you looked at the home for the first time, did you see any signs of why the owner might be selling? Is the home simply too large or small for the current owner’s needs? Does the house need too many repairs? Or has the area simply appreciated in value? The seller’s motivation, when you can identify it, is a great way to gauge your ability to offer less than the asking price.