Real estate negotiation is tough. Sellers want to get the most for their home based on its perceived value, and buyers want to negotiate down to get a good price. It can lead to a tough battle for the best deal. Negotiation doesn’t come easy for most people, and it requires practice, which is why many people hire real estate agents to do the negotiating for them. It’s one of the top benefits of using a Realtor®. But even if you're not the one sitting at the negotiating table, there are a few things you should know as a buyer or seller about the real estate negotiation process.
#1) The Market Determines Your Negotiating PowerEven if you hire a Realtor® specifically to help with real estate negotiation, the market in your area might not be suited in your favor. During a seller’s market, a homeowner might get several offers. There could even be a bidding war on the house with cash buyers. This means that as a buyer, you can’t negotiate a low price because the seller will just choose a better offer. Conversely, in a buyer’s market, a homeowner might have to take any offer they get or risk keeping the home on the market for several more months. Research how other homes are selling in your area to determine who has the power and who can afford to negotiate during the buying process.
#2) Each Buyer or Seller Has Different Negotiation LevelsWhile the real estate market plays a significant role in how much power your buyers or sellers have, so do the individual factors leading up to the negotiation. Consider these two homeowners and how flexible they might be on price:
- Homeowner A: just got a job in a different state and needs to move within a month. They want to use the equity from the sale to buy a house in their new home state.
- Homeowner B: recently retired and is considering moving into a condo. They want to sell their home sometime in the next few years.