Negotiation 101: The 3 things you absolutely must do before putting in an offer!

 

I’m often asked about how best to negotiate a great deal when purchasing a property. Of course there is no one single answer. There are however a few things you need to do prior to writing the offer. In fact, if done correctly, your best strategy will become clear as you prepare. Understanding these key elements will give you the confidence needed to negotiate from a position of power and get the home you want, on the terms that best fit your needs.

 

Rule #1: Know what you can comfortably afford. Every offer needs to include a pre-approval letter from a credible lending source, no exceptions. This tells the seller that you can actually qualify to purchase the home. More importantly, in the process of getting pre-approved, you are telling yourself what your comfort thresholds are. Make sure you factor in additional monthly costs as well: real estate taxes, monthly assessment if condo, utilities, insurance, etc.

 

Rule #2: Know what comparable properties in the area have sold for. While no two properties are exactly alike, you need to educate yourself on what other homes are selling for. Not what they are listed for, but what they are actually selling for. This will arm you with the data required to support your offer throughout the negotiations process.

 

Rule #3: Learn as much as you can about the property before placing an offer. Are they current on the mortgage? Have the taxes been paid? Why are they selling? How many showings have they had? Any previous offers? Sometimes the simplest of discoveries can lead to significantly increased leverage at the negotiating table. I should mention one thing too, it rarely matters what someone paid for a home. The only thing you should be concerned about is that you’re paying fair market value (or less) for the home today. 

 

In the end, a property is always only worth what someone is willing to pay. Careful preparation with the assistance of your Realtor and lender will always place you in the best possible position to succeed.