The first thing that occurs after you find a house you want to buy is that you make an offer to the seller. This may seem self explanatory, but in fact the offer making process is something of an art. A buyer needs skill in negotiating in order to get the best deal on the house in question. Someone who understands this negotiation process will have a final price in mind that is less than the seller’s listed price and start his offer out even lower, gradually working up toward this decreased price.
Estate agents have a vested interest in getting the highest price for a house because they often work on commission. The estate agent looks at the prices of other similar houses in the area and uses this as a guide. The estate agent receives a percentage of the sale price for successfully negotiating a sale of the house. This is something that it is important for a home buyer to bear in mind because they need to be wary of an estate agent’s valuations and sales attempts.
The following are some basic rules and guidelines buyers should follow to work out a good deal on the purchase of real estate:
1. Research the Property Market
It is very important to research the property market to look for current trends in pricing on the local and national scale. There is constant change in this market due to local and even global factors. Those in the market to buy a house need to be fully apprised of these fluctuations in the market and the factors that cause them. In a ‘buyer’s market’ for instance, the market – purchase of houses – has slowed down and so sellers are willing to take less for their houses. In these types of conditions buyers can often successfully make fairly low offers. Buyers can access the land registry for the area in question to see what similar houses have sold for and use this as a valuation guide. This can be used as a reference when planning an offering price and during negotiations.
2. Initiate Negotiations
A good rule of thumb when negotiations with the seller begin is to avoid stating a price before thoroughly finding out what is included in the purchase of the real estate. Make sure to have the seller enumerate all of the items that will be included in the sale of the property. It is also a good idea to find out the specific reason the seller wants to sell. What are known as “motivated sellers” are those in some kind of financial difficulty who may be willing to sell for a lower price than would otherwise be the case. Knowing the reason for the sale can also help you to tailor make your offer to the seller and to distinguish yourself from competing buyers.
3. The Bargaining Phase
As the bargaining phase progresses, try to arrive at the price you have initially decided on as your highest offer for the house. Describe to the seller your reasons for arriving at this price. The more evidence and sound reasoning you provide for the price you are offering, the more convinced the seller may be that you are genuine and that the house or property is really worth what you are offering. Hiring a surveyor to assess the conditions of the property is a good idea and can help give credibility to your price offer. Always bear in mind the motivation of the estate agent to secure a commission when you are negotiating.
Once a price has been arrived at, have a solicitor draw up a contract stating the price. When the buyer signs this contract, the deal will be complete and the buyer will receive ownership. The buyer and seller should make sure all the different aspects of the purchase have been thoroughly taken care of before closing.
Getting familiar with these basic steps and doing further research on what is involved in each of them will help a clients become good, even professional level, negotiators and closers. Those that are considered experts in the field often recommend actually practicing these steps to insure buyer confidence in timing and delivery. The better informed a buyer is, the better their chance of negotiating a deal that matches their initial offer price. Getting a good familiarity with these fundamentals of the art of property negotiation will help insure that a buyer’s dreams of owning a house come true.