In the real estate business one situation you are sure to encounter during a transaction is a few rounds of negotiations between the buyer and the seller. It is inevitable. Sellers want the best possible price for their property and buyers want the best deal.
Negotiating is an important part of investing in a property as buying a home is potentially the largest asset that a person will own and of course, there is a large amount of money at stake. So how can you make sure that you can get the best deal as a buyer/seller? In this article, we will be talking about 7 real estate negotiation tips that can help you make the best deals that satisfy both parties.
1. Let the other party have the first word
When you are starting the negotiation process, it is always better to let the other party state their position first; there are many reasons behind this strategy:
- You usually try to reach a midpoint when you are negotiating. When you let the other party speak first, you gain the ability to define this mid-point for the rest of the negotiation.
- There is the possibility that the other party’s offer actually works in your favour and is more advantageous to you that your original offer was. By letting the other party speak first you leave the possibility of taking advantage of this opportunity open for yourself.
2. Knowledge is power
A smart negotiator knows that a transaction isn’t always about the money. More often than not, it is about solving a problem. Learn all you can about the other party and what motivates them to buy or sell a particular property. If you find out what it is that drives them then you can make an offer that may be advantageous to both of you. For example, say that the reason why a person is selling a house is because they have acquired a new job and they need to move soon. You can offer to buy the house from them quickly if they lower the price slightly; this way you solve their problem of selling the house as soon as they need to and you are able to get a better price.
3. Listen to what others have to say
One of the strongest negotiating tactics that you can use is to listen more and talk less. People generally feel uncomfortable by silence, especially when there are negotiations going on. By staying quiet you effectively throw the ball into the other party’s court and they will then speak, revealing more about their own goals for the property and give more offers that may be advantageous to you.
4. Be as direct as possible
While it is okay to be friendly when you are negotiating, at the end of the day both parties are dealing with real estate and if you start sharing your life story and diverge from the matter of hand too much you are more likely to irritate the other party which may lead to problems down the road. Keep your negotiations simple and have each step planned out beforehand.
5. Have a Plan B
It never hurts to be prepared. Even if everything is going according to plan you never know when life might decide to change the situation and the deal goes south. It is good to have a plan B that you can fall back on should things not go your way. It helps you psychologically as you will know in the back of your mind that even if this particular deal doesn’t go through you always have a plan B.
6. Use friction to your advantage
Often if a deal goes down too smoothly; both parties end up feeling rather dissatisfied as they will feel that they could have gotten more out of the deal. In other words, they may feel like they did not earn as good a deal as they could have. Test the waters and keep a slight bit of friction when you are negotiating; that way both parties will feel like they got the best offer they could once the deal is done.
7. Keep your ego away from negotiations
One of the most important points to keep in mind when negotiating is to keep your emotions in check. Strong emotions can make negotiations go south very fast and you might end up with a bad deal or no deal at all. Keep things professional when negotiating; remember, at the end of the day this is a business transaction so treat it as what it is.
Saying good things about the other party can often go a long way as well. It is surprising how far some sincere flattery can help in getting you a better negotiating outcome!
Good negotiations can make all the difference when it comes to investing in real estate; it allows all parties involved to get the most out of a transaction and everyone feels like they have accomplished something positive once the deal is done. We hope these tips will help you in your future real estate endeavours and will assist you in getting your very best in negotiating a deal.
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