Understand Who You Are Up Against
In an ideal world, negotiating a real estate deal would mean finding a win-win for everyone involved. Often it can feel more like wrestling an alligator. However, those that take the time to understand the people on the other side of the negotiating table will find their offers and transactions go much more smoothly.
Use the resources, tools, technology and data available to find out more about what the seller (and their agent) want. This may include leveraging a good agent yourself, searching Google, local public records and more. You want to know what their motivations are, and which factors are most important to them. Is it the speed of closing or a certain closing date? Is it avoiding a tax hit, walking away with a certain amount of cash in hand, securing the commission, minimizing hassle, or just the confidence that they are contracting with a buyer who will close on time?
Note that just because you know all this information doesn’t mean that you’ll be laying it all out there for them in your first offer. Everyone likes to feel they are winning something in the negotiations. Anticipate where a seller will push back with a counter offer, what items you will give and take on, or not. An experienced real estate agent will be able to guide you in these decisions.
Know Your Percentages
One of the easiest data points buyers can get their hands on is the average asking-to-selling price ratio. For example, if the average ratio in your area is 98%, you know that you can probably comfortably offer 2% below asking price. You might even go a little lower, and expect to negotiate up.
Look Well-Qualified on Paper
One of the biggest fears of sellers and sellers’ agents is that buyers won’t follow through to closing. They are looking for signs that you are a serious, well-qualified buyer. This is shown in various parts of the purchase offer contract and can be revealed in your supporting paperwork. How much money are you putting down? Are you showing proof of having the funds to purchase, or at least a pre-approval letter from a well-respected mortgage lender? A great cover letter can also be a powerful tool which can tip the scales in your favor in multiple offer situations.
Hot tip: you don’t want to appear overqualified either. It may tempt the seller to negotiate harder on their end.
Know What’s Typical in Your Area
All real estate is local. What is typical in an offer and transaction can vary by price point, as well as the county. Know who typically pays for the title insurance policy, what a reasonable amount of earnest money deposit is, and which contingencies are likely to be accepted or laughed at. Broward, Palm Beach and Miami-Dade County can all have slightly different traditions in these respects. When selecting a real estate agent to represent you, look for someone with significant experience in your market.
Get a Good Closing Agent
The real estate attorney or title insurance company you use for escrow and closing can make a significant difference in how the transaction progresses. The closing agent is typically the hub of coordination. It’s where the financing, title, insurances and parties all come together. A great team in this position can help keep the deal together when challenges arise, someone is dragging their feet on closing, the seller has issues with performing, etc. They may even help if there are points of contention which require some renegotiations or credits, such as certain repairs not being finished by closing, or when unexpected delays occur. Much of the time issues like these are avoidable, but when they do arise having a great closing agent makes all the difference.
Secure Your Own Real Estate Agent
A seller’s real estate agent’s main priority is to represent that property owner’s interests. It’s in their best interest to sell for the highest possible figure to the most qualified buyer using the simplest offer.
However, this may not be in your best interest. Since it costs no more to have your own professional in your corner, get one! In Florida, the seller pays the agent’s commission, even if you don’t use one. Why not benefit from that, and take advantage of having a top-notch negotiator and buffer in the game for you? Getting a great broker - like Tim Elmes - means you will be represented by one of the best negotiators in the industry who has gotten to know the market over a period of decades. It’s a crucial advantage to have in the Florida market, and an opportunity you don’t want to waste.
Putting a great team in place to prepare for negotiations, making a great offer and - of course - getting the right Fort Lauderdale real estate agent in your corner are all critical factors in getting the Florida home you really want, and on the best terms. Put the above tips to work for you, and enjoy more successful real estate negotiations when it matters.