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 Negotiating Best Interest
Information on how to buy a home in Columbus and Central Ohio.
When negotiating, there are three goals in mind: - Get the best price possible.
- Get the most favorable terms to protect the Buyer's interests.
- Minimize risk and exposure for the Buyer.
Prior to negotiating, keep in mind that price is determined one of three ways: - Comparable sales. Reviewing recent sales of comparable properties, how long they took to sell, and comparing the area's selling price to list price will give you a good sense of relative value. This is one of the more important valuation techniques used by appraisers.
- Motivation of the Buyer and the Seller. The price can be greatly affected by how much the Buyer wants the home and how much the Seller needs to sell it. The ability to get a below-market price on a home will depend on the Agent's ability to determine the motiviation of the Seller and devise a strategy to take advantage of any Seller weakness.
- Suppy and demand of available properties. Simple economic principles provide that strong demand and low supply will increase the price and, the reverse holds true for high supply and low demand. In real estate jargon, they are called the Seller's Market and the Buyer's Market. In a "hot" Seller's Market your Agent's job may be to just get you the house. In that case you may pay more than list price and your Agent will aso have to find ways to strengthen your position versus that of other Buyers.
Before you start negotiations, determine the following: - What do you believe to be the fair market value for the property ?
- What price would you like to pay ?
- What is the most you would pay ?
This evaluation needs to be made free of your emotions to help you focus on your goal: Keep in mind that: - The best price possible is obtained when the Seller is willing to stretch to a lower price. If the stretch is too far then the negotiations will not be completed. You want the Seller to be saying "the price is lower than I would have liked, but ..."
- When you play the game you have to be willing to lose the game. If you are approaching the negotiations as a game and are going to make offers that are not like to be agreed upon, you will be keeping the door open for someone else to make an offer on the property. This is especially true for a good house in a great location in a Sellers market.
- Devise a strategy with your Agent that will achieve your goals and minimize the opportunity for someone else to make a competitive offer.
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