How To Win A Real Estate Negotiation
Having been a Realtor in Tallahassee for more than 25 years, I have seen my fair share of real estate negotiation styles.
It's funny though, there really are only two primary strategies that we see from people who haven't bought or sold a home in a while, and they rarely work.
If you are thinking of selling a home or buying a home in Tallahassee, take the time to understand these basic thoughts on real estate negotiation and I promise you will fair better in your next transaction.
Real Estate Negotiation - The Home Seller
EVERY home seller wants to get the top dollar for their home. I understand this and I suspect the majority of my peers understand this. Nevertheless, most sellers feel compelled to tell us this. They say "I don't want to give it away." Really? After 22 years in the business, I'm still waiting for the home seller who is going to say "Joe, I just want to give this home away."
Ignorance (of the home's market value) leads all sellers to naturally want to over-price the home. This is their #1 seller tactic ("let's ask $300,000 and see if we can get any takers"). Unfortunately, as you will see below, it never works. Why? Well, how about we look at the real estate negotiation position of buyers.
Real Estate Negotiation - The Home Buyer
EVERY home buyer wants to get a good deal and they don't want to spend more than they have to. I understand this and I suspect the majority of my peers understand this. Nevertheless, most buyers feel compelled to tell us this. They say "I want to see what the seller will do." This too is a mistake.
Ignorance (of the home's market value) leads all buyers to naturally want to under-offer or wait too long to make an offer on a home. This is their #1 buyer tactic ("let's offer $225,000 and see what they'll do"). Unfortunately, as you will see below, it never works. Why? Well, if the home is priced correctly, your offer is either too late or it is lower than what the smarter buyers offered. If it is priced incorrectly, then the seller is not ready to sell and will not come off their grossly overpriced home. Either way, you can't have the home.
Using Fear And Greed As A Real Estate Negotiator
We show the following image to every home seller and every home buyer with whom we work. Why? Because we want our customers to understand how to win a real estate negotiation, and the best real estate negotiators know how to create both fear and greed when working an offer into a contract.
This image works for both seller and buyer.
Both parties want to take advantage of each other's greed (the need to get a good deal), and both should want to control the transaction with an element of fear (fear of loss ... seller losing a good buyer/buyer losing the home to another buyer).
The Home Seller - The lower the seller sets the asking price, the more "greed" she can pull from the market. If the price is set correctly, multiple buyers will feel compelled to come forward to take advantage of the opportunity. This is how a seller can maximize the buyer pool for her home. Buyers will be forced to make aggressive offers out of fear of losing the "best deal" available.
The key is knowing "how low is low, and how low is too low and leaving money on the table." This is why having a true expert in the Tallahassee real estate market is worth a lot of money to a home seller.
The Home Buyer - The higher the buyer makes the offer, the more "fear" they can elicit from the seller. The seller wants the most money possible, but a compelling offer that is high enough to beat the competition but lower than the seller might be able to make is often times the perfect offer from the buyer.
The key is knowing what the home would sell for if this buyer did not get involved. Knowing the true market value for the home will allow the buyer to make the perfect offer that makes the seller fearful of countering the buyer's really good offer.
How To Win A Real Estate Negotiation
Notice how both erroneous tactical positions, both by home sellers as well as home buyers, are the result of ignorance. They do not know the true value of a property, so their fear of making a mistake causes them to be too conservative in their position.
And notice how the winning methods for real estate negotiation rely on awareness of market value. Do not take this guidance likely, understanding real value is the difference between negotiating a great deal versus losing in a real estate transaction.
This is why having a great listing agent and a real estate buyer's agent are so important. If you know the person you are working with is an absolute expert in home values and the Tallahassee real estate market, then you can have the confidence in knowing the real value of the home in question.
This confidence in your real estate agent will allow you to make a compelling offer (or have the correct initial asking price for your home), thus allowing you to win the real estate negotiation.
If you need to win a real estate negotiation in Tallahassee, just drop me a note and we can schedule a time to review your situation and give you the guidance you need to succeed.