According to the 2011 National Association of Realtors® Profile of Home Buyers and Sellers, the second most popular reason buyers use a real estate agent is to help with the negotiation process. However, buyers can negatively impact the process making mistakes which lead to them losing their dream house. Don’t make these negotiation blunders:
- Not entering with a negotiation strategy: Before submitting an offer, try to remember that the seller has already decided how much money they want from the sale of their property. Knowing how to negotiate effectively is the key to getting the best deal. Without a plan, you might risk losing the house you want.
- Giving up too soon: Buyers might get discouraged when they are competing against multiple offers on a house. However, the biggest mistake a buyer can do is panic and withdraw their offer. You should stay involved for at least one round of negotiations, but also establish your maximum price.
- Not providing earnest money: Earnest money is a cash deposit you make when submitting your written offer on a property to show your “good faith.” Sellers are understandably suspicious of offers that are not accompanied by such a deposit.
- Having too many contingencies: A contingency is a term or condition that must be met for an offer to become a binding contract. Home buyers with too many contingencies tend to weaken an offer. Some examples of contingencies are securing a job transfer, selling your current home or obtaining specific financing terms.
- Weak negotiating position: Sellers usually like to go with a strong bargaining position. Some examples of strong positioning is being pre-approved for a mortgage or having little to no contingencies. “With these factors in your favor, you may be able to negotiate a lower price. On the other hand, in a ‘hot’ seller’s market, if your ‘perfect’ home comes on the market, you may want to offer the list price (or more) to beat out other buyers.