Every real estate investor needs to have several negotiation tips and strategies at their fingertips. It is a part of the property buying process, where buyers and sellers trade cautiously. While sellers focus on making the most out of the deal, buyers tend to parry by deconstructing the prices.
Enthusiastic Norfolk investors must be aware of the fact that the median listing prices of a home in Norfolk ($265,000) are different from the selling prices ($276,000). However, some may overlook the fact and fail to negotiate effectively. As buyers, you should aim not only to assess housing values but also to test the seller’s vulnerabilities.
Here are a few negotiation tips and strategies Norfolk investors should consider while purchasing a property.
1. Let The Seller Make The First Move
The sellers will never negotiate on their decided home prices. It is your call to start the negotiation. But as they say, “silence is a powerful bargaining tool that sellers find hard to read,” you should let the other party speak first. An opening offer may allow you to know where the conversation can head and which points you should speak about. Also, you can make a counteroffer to the quoted price so that you can lead the negotiation towards a mutually acceptable price.
2. Know Why The Seller Is Selling The Norfolk Property
Whether you hire a real estate agent or deal by yourself, you must know the reason behind the sale of the property. Sometimes, sellers are planning to move out of the city for a job or other reasons, hoping to crack the deal on the first go. They might accept the price offered by buyers who are ready to close the deal immediately. But if they want to sell the property to buy another one, there is less room for negotiation as they will take enough time to get a higher offer.
3. Use Market Value As The Base Price
This is one of the most effective negotiation tips. You should focus on the market value of the property instead of asking the price from the seller. Often buyers offer deceptively low deals that are rejected by the seller. But if you negotiate based on market research, you can make reasonable offers that the sellers would agree to accept quickly. Make sure you compare all the listed properties in your preferred location before initiating the negotiation process.
4. Do Not Go Too Low
As a buyer, you will surely tend to quote lower prices for the Norfolk property, but quoting under-market prices might end the deal prematurely. The homeowners might also take it as an insult and think that you are not serious enough about sealing the deal. It might even come through as your ignorance regarding the real estate market. We, therefore, recommend conducting research about current home values in your region and offering a price that is fair to both parties.
5. Avoid Being Disrespectful
As buyers, you should realize that selling a Norfolk property can be an emotional moment for another party. Since there are so many fond memories attached to a place, the seller may feel nostalgic while negotiating. In such situations, you should avoid making harsh comments on property conditions and try to be as calm as possible. You may see many things that you find unsatisfactory, but consider using a soft tone while speaking and make sure sellers will not feel offended.
6. Know What Is Negotiable
Pay close attention to the points that are negotiable in general. There are several aspects that you can negotiate about while buying a property, but the most significant things are,
- Commission Rate
It is a percentage of the total sale price that a seller has to pay to a real estate agent. Generally, the commission rate is 6% of the total cost and is divided between agents and their brokerages and may vary based on location and agent. For example, if the cost is $50,000, the 6% commission rate would be a $30,000 split between sellers and buyers’ agents. Inquire about the commission rate for real estate in your area before the negotiation process.
- Marketing Cost
Marketing helps sellers to reach a larger pool of tenants, but it includes the marketing costs that you can negotiate, such as:
- Property listings
- Photography
- Promotional copywriting
- Property description letter
- Social media ads
- Property Advertisement in home magazines
- Closing Costs
The closing costs associated with a home often range from 3% to 6%. The price includes appreciation fees, mortgage insurance, and a credit report check. You can ask the seller to pay all or a portion of the closing cost during negotiation. But, you can pay the cost to make the deal more appealing and profitable for you.
Also, home price, closing date, home repairs, appliances, and furniture are the things where you can negotiate to a certain extent. Inspect the property before starting a negotiation. Find the downsides of the property, such as repairs, non-functioning appliances, and a faulty plumbing system. It will allow you to negotiate several dollars of the price or give you the confidence to walk away.
7. Have A Contingency Plan Ready
A contingency refers to a clause in the negotiation process that the buyer and seller must agree with before it becomes legally binding. Negotiation is a challenging process where you always have to convince sellers to lower the home price. As a buyer, you can always explore other properties, but you can negotiate by offering deals about repairs and property maintenance or being flexible about pricing.
8. Always Negotiate In Person
Successful negotiations rarely happen online. When you meet the seller in person, their facial expressions or gestures let you know about their next move and use your negotiation skills confidently to crack the deal. On the other hand, through email or virtual chat, you may fail to understand the seller’s point of view, which may affect the negotiation process. Try to be a partner with the sellers whom you negotiate and push for win-win outcomes. Consider using your presentation skills to impress the other party and encourage them to sign the deal.
9. Ask the Right Questions
Negotiation is a two-way process that involves lots of interaction. It is good to be a little curious and interrogative during the process. Consider asking open-ended questions that force the other party to cede the information. Focus on discussing the property, its structural background, and construction history. We suggest focusing on points that offer scope for price reduction and other benefits.
If you are buying a rental property, ask questions about repair history, tenancy, and vacancy rate. Avoid asking binary questions, such as is it your final offer? Instead, ask questions like what would you say if I told you the deal simply couldn't work for me? Make sure you observe the way the sellers answer your questions. See if they contradict your questions or answer them honestly.
10. Do Not Act Like It Is Your Last Deal
There is no need to get personal or over-negotiate at the table to win the deal. Since negotiation is a tiring and lengthy process, it is easy to fall for bad deals. No matter what side you are on. Avoid being over ambitious and behaving like it is your last deal. You have to play carefully and understand the mindset of the other party to win the deal. You may feel discouraged, especially when you have invested time and money and achieved nothing during the process. But we recommend being a little patient and progressive. Ultimately, rejecting the deal or walking away from it is always an option.
11. Do Not Take Too Long To Close The Deal
Make sure the property meets all your residential requirements. Consider evaluating the surrounding area, curb appeal, neighborhood, and other crucial things. If everything goes according to your expectation, close the deal without delaying the process, as you are not the only one standing in the row of potential buyers.
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Buying a property in a competitive market like Norfolk is tricky. You have to act quickly and make every effort to grab the best property deal. If you are unaware of negotiation tips and strategies, you can hire a property management company to find a suitable unit as per your requirements.
Doud Realty Services is a renowned property management company in Norfolk that offers real estate services, facilitates a transaction between sellers and buyers, and assists you in achieving the best deals.
For more information, contact us at Doud Realty Services.