Playing Hardball: Negotiating Property Price Like a Pro Investor
If you’re buying or selling investment properties, your profits are on the line. Therefore, you need to negotiate like a pro to get the results you want. Here are some tips to take you from amateur hour to the big time from the top real estate agents Bellevue, WA turns to for real estate knowledge.
Make Buyers Like the House
Buying is in part an emotional decision, based on aesthetics and gut reactions, so you can play to that. Ways to get buyers to like a property include:
• Improving the curb appeal with nice paint and landscaping
• Making the interior smell nice
• Staging the property so buyers can imagine living there
• Creating a homey feel with a fire or food on the table
Learn Why Buyers Want the Property
Sometimes buyers are attracted to properties for practical reasons. The more you understand their rationale, the more you can emphasize the parts of the home that meet their needs, such as:
• Yard or view
• Accessibility, conveniences, and configuration of the rooms
• Interior architectural details
• Historic value
• Modern interior amenities
• Turnkey status
• Space for residents (enough bedrooms, baths, etc.)
• Bonus rooms (recreation, sunroom, workshop, etc.)
• Kid or pet friendly
Offer Extras and Contingencies
To sweeten the deal to a buyer, you can throw in extras. Common perks include appliances, patio furniture, window treatments, paid dues, extra parking, etc.
Some sellers offer to waive contingencies. For example, you could waive the common home sale contingency that allows buyers a certain amount of time to sell their current home before their offer is no longer valid.
Provide a Home Warranty
A home warranty often puts nervous buyers at ease. This type of warranty covers major elements of the house, like appliances or the furnace, should they break down within a certain period of time.
Get the House Inspected
While it’s customary for buyers to pay for a home inspection, a seller can also get the house inspected. You pay for the inspection and provide all the documentation so buyers can see how sound the home is. Even if they decide to do their own inspection too, it’s much less of a gamble for them.
Reject Offers Without Countering
If you’re confident that your property will sell in a competitive setting, or if a buyer tenders a ridiculously low offer, you don’t have to counter. You can simply reject the offer. Next.
Counter at Your List Price
Since you’re an investor and not your garden-variety homeowner, you and your broker have done the research to price your property appropriately. If buyers submit offers beneath your list price, there’s no law that says you have to counter halfway. You can counter with your list price, put an expiration date on it, and send a strong message.
Leverage an Open House to Create a Bidding War
Nothing gets buyers more amped up to compete with each other than a popular open house. When multiple buyers think they’re going to be outdone by each other, they tend to offer over the asking price, and a bidding war starts.
Agree to Pay Closing Costs
If you are in a hurry to sell and want to seal the deal, you can offer to pay the closing costs. This can save buyers thousands of dollars and entice them to overlook any negatives about the property that were giving them pause.
Start with Market Value, Not Asking Price
When looking at homes for sale in Bellevue, WA, there are also negotiation strategies you can use to your advantage. For one, when tendering an offer, start with the market value, not the asking price. You should know the market inside and out if you’ve done your homework. If you think the owner has priced their property too high, be ready to defend your offer based on your research.
Include an Escalation Clause
In a competitive seller’s market, buyers can use an escalation clause to snag the home they want. An escalation clause simply says that if the seller receives another bona fide offer above yours, you will automatically bid a set amount above that until you reach a predetermined cap. It saves a lot of back and forth and lets the buyer know you’re serious.
Use Anchoring to Find the Seller’s Lowest Price
Sometimes sellers use anchoring to set a price higher than what their home might actually be worth. This means pricing the home on the high side, hoping people will see the asking price as what the house is worth and not even consider offering less. As a savvy investor armed with market knowledge, however, you can offer less than asking and see if the owners bite.
Don’t Reveal Your Budget
You don’t have to tell every agent you meet what your buying budget is. Sometimes it’s best to keep your cards close to your chest. You don’t want agents thinking you’ll keep going up if they counter your offer.
Be Prepared to Walk Away
Finally, some properties just aren’t meant to be yours. If the bidding gets too high for you, or if the owner’s requirements are too insane, it’s time to pass and move on. Fortunately, with investment properties, you can avoid most of the emotional aspects that accompany shopping for your own residence.
Buying property as an investor can be tough, but the negotiations can go your way if you take these suggestions to heart and practice them with every deal. You’ll be a pro negotiator in no time and get the results you want without a lot of hassle.