In the real estate industry, 2021 was a seller’s market. Most people expect this selling trend to continue in 2022 and beyond. Shortages of high-quality homes and historically low mortgage rates are driving up property prices across the world.
Whether you’re buying/selling properties – navigating this intense market will not be easy. You need to be equipped with high-quality negation skills to secure profitable deals in the current market.
Here are some simple yet effective real estate negotiation tips that will always serve you well –
Leverage is key in any transaction or deal. In real estate, the term “leverage” is used to describe how much “power” you yield.
- To what degree can you extract a concession from your buyer/seller without giving away anything? The more you can extract from a deal without giving up too much, the more leverage you have.
- How much can you influence your counterparts to achieve whatever your favored outcome? The more influence you have on your counter-parties, the more leverage you have.
In real estate deals, it’s normal for leverage to swing back and forth between buyers and sellers. For instance, in the early stages of most real estate deals, buyers have more leverage than sellers. Buyers can browse through multiple properties without locking in any of their cash. However, as these deals progress, buyers tend to lose a bit of leverage.
- For example, let’s say a buyer doesn’t conduct a pre-purchase home inspection. The deal goes through and the seller walks away with the buyer’s money. The buyer then discovers that the original property was overvalued and has several flaws.
Understanding when you have leverage in a real estate deal is very important. Try to maintain this leverage until you commit your finances to the deal.
If you use facts to negotiate deals, you won’t have to alter your negotiation tactics when circumstances change. On the other hand, if you use false narratives to manipulate your counter-party, you weaken your position.
For example, let’s say you have a strict deadline to sell your home. You should understand that this fact matters the most to you. Prioritize this fact throughout all negotiations. Establish a strict timeline, inform the counterparty, and sell the property within the given deadline.
Don’t Play Zero-Sum Games
There’s no room for playing zero-sum games in the real estate world. A zero-sum game is a game in which one party benefits at the cost of the other party. In real estate deals – both parties should get what they want and benefit.
- The conventional “winner takes it all” mentality isn’t helpful in real estate negotiations. Instead of pitting yourself against buyers/sellers, try to negotiate deals that mutually benefit all parties involved in the deal.
- Finding such mutually beneficial solutions in real estate deals isn’t easy. The easy thing to do is maximize your profit in every way possible. But such attitudes give property owners and agents bad reputations in the market.
- Transparency, courtesy, and the desire to create value for others are attitudes and behaviors that the real estate industry rewards.
Hire an Experienced Real Estate Agent
Are real estate agents worth the money? Yes. Many property buyers/sellers are often tempted to “DIY” their negotiations and acquisitions. By doing so, they end up harming their chances of financial success. Real estate negotiations are very complicated processes.
Inexperienced negotiators can easily get hoodwinked into bad deals. The time, stress, and potential losses aren’t worth the money you save by not hiring an experienced real estate agent.
On average, real estate agents charge 5 to 6% of the property’s overall sale price. That’s money well-spent for inexperienced property buyers or sellers.