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More Real Estate Negotiation Tips For Home Buying and How To Get The Best Deal!
For those that read the blog regularly most realize I really like the actual negotiations and trying to get the best prices/deals for my client. I have written several other posts all about negotiation (which you can see here) all of which I think if you read the posts and apply them to your purchase should help you, or at least assist in you getting the best deal on your home. On this post I wanted to take some real situations I personally learned from clients over the years this has helped me become even better at the art of negotiation and getting the best prices/deal for any client of mine.
The first experience I will give you is one where I really learned how far being able to negotiate will take you. See most people never realize how to make people like dealing with you, they think negotiation is all about holding firm and pressing but far from it. I would (in my opinion) suggest knowing how to “work” the other side, is 75% of the battle. Once the other side “Likes” working with you even if they don’t like your terms and price they are much more likely to meet you closer to YOUR number and further away from theirs. I learned this from a very wealthy and successful businessman; at the time 6-7 years ago I was helping him to buy an investment home and he wanted to do most of the negotiations himself. In retrospect I should of paid him to teach me all this, but anyway he would do everything he could to warm up the other side. He wanted to get a very aggressive price and terms, but he knew that by “charming” the other side would want to work with him and knew he was a serious buyer. What did he do? Well he would do things like constantly talk about how nice the home was, and how he would really like to buy it but needed the seller to “work” with him. Then he would just constantly proceed to work them. Eventually he got a great price and he bought the property, but the moral is that other then price and terms he did everything to make the seller want to deal with him. Large earnest money deposit, any time the seller asked something of him right away he would provide it. (IE: loan approval, these were the days when you could buy a property without having to show you could get the loan it was just assumed you could.)He was very pleasant to deal with as long as you with the exception of the price and terms he wanted to pay, this “charm” in my estimate got the seller to accept most likely 10k-15k less then they would otherwise. Also keep in mind this client was very wealthy and personally owned a 1 million dollar plus home. He was buying a 150k investment and still acted as if that home was like the first home he ever bought, and had been dreaming of for years. Sellers are interested who wants to buy their home the people they want to ensure that the purchaser is going to take care of it and cherish it like that seller did. Who would like to sell their family home to someone who was going to rip it all apart? No one, hint: if you’re going to do that DO NOT LET A SELLER KNOW YOUR PLANS, it will cost you money: GUARENTEED! Now currently this past client is running a large division of one of the biggest life insurance (and general insurance) companies in the world, and has moved to work out of the companies world headquarters in New York, New York. When he was in Tucson he was the president of the company’s Tucson AZ division. Now the reason I say this is because I highly doubt he only used this strategy when negotiating real estate, he is a highly experienced successful corporate executive. From that deal on I realized how important it is for me or any client of mine to have a very helpful and positive outlook when dealing with the other side with exception to the price and terms. This “charm” can many times make all the difference in the world and put extra money in your pocket.
The next tip is never tell the other side where you stand. I know this seems so, so elementary and simple but believe me people, real estate agents, clients, all types of people accidently do it. Here’s an example that is very common: A client of mine and I decided to reduce the price of their home for sale. After I get all the paperwork done for the reduction BUT before I can reduce the price accordingly in the system (This is a real true story that happened 4 months ago!) an agent representing a potential buyer calls me up to ask some questions about the same listing of mine I was about to reduce in price within the hour. He calls and asks some general questions about the home and then before I hang up with him he states,
“Well this all seems perfect for a buyer of mine, I expect my client to be willing to place an offer on the home, but he won’t be able to see it until tomorrow so will you please call me in case you have ANY other activity on it……”
Ok” big deal” your thinking, so what the agent is trying to make sure no one steals the house from a client he is sure of this listing will be perfect for. That part IS true however I play the part of:
“Well I have a couple other people going to take a second look and it would be best if you could get him out to the property today to see the listing, otherwise it might sell”…….
Now that was a lie, to be honest I thought the seller wanted to much for the home and we were having a hard time getting buyers willing to look at it for the listed price….However that’s the last thing I’m letting anyone know especially the other side’s real estate agent! Ok so what happened next is this; the agent relays my message to their client and they run out to see the listing (Already excited that there not sure they can even get the house.) This is a big part of making a buyer BUY they must fear it wont be available if they wait.. Then the very next morning I get a next to full price offer BOOM! Now the offer wasn’t “full price”, however it was for sure more then the new price we were about to reduce the home too…..To this day the buyer has no clue the price reduction would have been entered and the price would have been reduced significantly. EXCEPT their agent indicated (not on purpose but by trying to help) that they had someone that this property would be perfect for (and it was). I then sold the fact that they should hurry and do something before someone else did. Now this kind of stuff happens all the time, loan officers blab, title officers don’t know what there not “supposed to say”, the list is endless. I’m not talking about fraud or anything that is obviously against the law and wrong. I’m just talking about small tidbits of information that get out, and if an agent or a client is really smart they can take advantage of it big time. This particular deal and client didn’t teach me this; another client did and I will explain it to you now.
I had another very successful business man that had moved to Tucson to help be a main manager and run several of the copper mines that ring Tucson, this client was (like most very successful business people) highly skilled in negotiations. This story somewhat follows the other, he had moved to Tucson and wanted to buy an estate home for his family. (He actually was buying a lot of homes at the time the market had fallen a lot and I think in 5 years he will have made millions on all these homes but that’s not part of this story.) When I was trying to “help” (again it was more like he was helping me a lot more then me helping him, I’m not sure he needs a lot of help other then statistical guidance and industry knowledge anyway.) he would not divulge like hardly any info AT ALL! I mean when we would meet I would give him all the stats he asked for the night before, then he would make decision using that info tell me what he wanted to offer and then I would go to the other side. No matter what I could not get extra info out of him period! He wasn’t being mean, but he didn’t want ANYONE and I mean ANYONE to know what he was thinking or willing to do too buy the home he wanted. I myself had no idea when I would go back and forth if he was actually going to buy anything, because he was so secretive about the whole situation. Well after he had his deal negotiated it finally dawned on me why this client was so secretive, in his past dealings as anyone who has done a lot of deals has discovered, people talk….It is in no way a good thing if by some out of the way, way info that shouldn’t get to the other side does. So what he did was essentially tell no one anything…..He would give me the bare minimum of what I needed to know and I mean the minimum like only a price, so that whatever terms the seller came back with he could make a decision and would not have to risk anything. At first I thought he must not trust me, however after getting to know him that wasn’t it at all. Even his wife told me that she didn’t know what he would want for price etc. He only asked her if she wanted the house, she said she did so he took care of the rest.
The moral of the story is as a client or an agent, (well if you’re an agent obviously tell your client all the info but I’m talking about when talking with others, Title/ Escrow officers, Lawyers involved, lenders, banks, sellers, anyone period.) only tell others the bare minimum of what they need to know, otherwise you allow information to possibly “leak” to the wrong side, or allow others to make assumptions about what you or a client maybe willing to do to make the deal happen. This may seem so easy but believe me even as a client it is hard not to give off clues and info to people that they should not be receiving.
Another example: You like a home so you want to go see it again with your whole family, your agent sets up the showing at night with the sellers and they ask “is it ok if were home while they look?” sure your agent says. You then take your family to see it and the whole time everyone is talking about how great the home is and picking rooms etc…..At this point the seller knows you want to buy! See how these things go wrong? Don’t give off anything it’s pretty important! In this situation (as most) it’s always best for sellers and buyers to stay away from each other. For this reason of it’s very hard for the clients not to give off all sort of info that ends up costing them money and negotiation power.
Now to be honest I have dozens of other examples and stories to show how these two primary negotiation tips can and will save you money. As a buyer OR seller regardless of where you live or the price range you are in. If you’re looking for additional Real Estate Negotiation Tips please read some of the other posts I have written for this blog, and check back as I will write additional Real Estate Negotiation Tip posts. Negotiation is one of my favorite topics to cover because a lot of people think they understand the concepts, but end up hurting themselves constantly. Also if you are looking for a Real Estate Agent try to hire one who really understands true Negotiation concepts and strategies in most cases that factor alone will save you the money that the real estate fees cost.