If you are getting ready to make an offer on a home, the following items should be considered to maximize you potential for a Pro-Buyer negotiation.
1. Comparables – One of the most important pieces of information a buyer needs to know once you find a home you are considering making an offer on is, What have the homes in the neighborhood sold for. This information is called Comparables. Knowing what similar homes have sold for – in your target neighborhood sets a benchmark to determine if your target property is priced at Market Value or not. Be careful not to consider what homes are SELLING for but only what they have SOLD for. A trick some agents do is they try to use Selling Price to establish Market value. Selling price on a home for sale has no purpose in your analysis . On the other hand SOLD price has much value.
Almost all areas of the country has an MLS “Multiple Listing Service”. This MLS has data on homes for sale in the marketplace. But the most valuable information in the MLS, is the SOLD information. What you need to do is obtain this Sold information from your agent. Keep in mind unless you are using an Exclusive Buyer’s Agent, the agent may be reluctant to share this information.
The reason is – traditional agents are caught in a Conflict Of Interest by
sharing information that could benefit buyers if they represent sellers. For example . . .What if after looking at the comparables, the MLS data shows that homes have sold for less than the price of your target home? The traditional agent may be compelled to withhold this information if the home you want is their listing or their company’s listing. Or they have other listings in that neighborhood. Also, make sure you receive ALL Comparables in the neighborhood. Make sure the agent has not “selectively” given you just the high Sold Home comparables. You want to see all data.
2. How long has the home been on the market.
In my experience, the longer the home has been on the market the better the chances for a Pro-Buyer negotiation. If a home has been on the market for 3 days, the seller will probably not be as flexible as a home that’s been on the market 3 months. If the house has been on the market for a short period of time and you know this is the home for you, you can still negotiate for it. You just need to approach the negotiation from a different angle. Call us for details.
3. Price Drops – Be careful with homes advertised as “Recent Price Drop”. Price drops can be a good sign if after analyzing the Comparables they are dropping the price lower than the recent SOLDS in the neighborhood. On the other hand ; lets say the seller has their home $15,000 over market priced to begin with, and they lower the price $10,000. They are still $5,000 over what everyone else in the neighborhood paid. It’s Still Over priced. Does the sellers price drop impress me? . . . . NOT at ALL !
Your objective is to purchase your home below market price so, always look at the Comparables and you won’t fall for this technique.
4. Negotiating Strategy – Your negotiating strategy is so critical I cannot emphasize enough the importance of using, not just a plain Buyer’s Agent, but an Exclusive Buyer’s Agent to take you through this process.
But let me share with you some major points; Agents who are Exclusive Buyer’s Agents are free to negotiate aggressively for the buyer on all transactions, therefore their negotiating strategy and experience is always focusing on Lowest Price And Best Terms for the buyer.
However, If you use an agent who changes from negotiating – for Sellers – to Buyers – to Dual Agent “both buyer & seller” – to Non Agent “neither buyer or seller”. They are always having to adjust their strategy because of Conflicts Of Interests issues.
The result, in my opinion is the Buyer Receives
a Watered Down negotiation. Which increases the chances of
“Leaving Money On the Negotiation Table”.
5. Have You Seen The Market – Once you have determined your price range, and the area of town you want to live, go out and see a bunch of homes ! It is work, but it’s worth it. Some agents idea is to spend 1 afternoon with you, show you maybe 6 houses, in which 3 are their own listings – and expect you to make an offer on a home.
Remember . . . . . You may end up buying the first home you see. But it should not be until you have seen the market in your price range. Becoming an “Expert in Your Price Range”, by seeing numerous homes, is another assurance in protecting you when you do find the home you want to make an offer on.
In my Exclusive Buyer Broker business – I would never want my buyer come back to me 3 months after they purchased a home and say, Eric. “Why didn’t You Take Me Into That Neighborhood”? The homes are bigger and better and in my price range. . . . . Fortunately, I have never had a Buyer ask that question of me. Because I make sure my buyers “Have Seen The Market”.
6. Closing Costs – Remember this. No matter what anyone says. It is not “Traditional” for buyers to pay for closing costs. Closing Cost Are NEGOTIABLE.
I hope this quick Checklist has helped. There are so many more dynamics of a negotiation. I would be happy to provide a FREE Evaluation of your specific situation.
Now Available . . . . Call For
Pro-Buyer Clauses That Should Be In Every Offer.
Eric Kruse “Exclusive Buyer Broker”
Buyer’s Advocate Realtors
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