Real estate success often depends heavily on negotiation skills. Your ability to know what the other side wants and reconciling it with your own interests can make or break a transaction.
If you’re not comfortable with negotiating for whatever reason, it may be very tempting to just say yes to everything and avoid the hard conversations. But that approach usually leads you to an undesirable outcome.
We’re here to help make negotiation as a homebuyer a bit more manageable. Here are a few tips to keep in mind.
1. Find out why the property is for sale
A homeowner’s reason for selling (or RFS as it’s often referred to) gives you insight on which terms are easier or harder to negotiate.
Are they downsizing to a smaller home? Will they use the profit to pay for emergency expenses? Or, are they selling to get rid of a potentially problematic property?
Listen carefully to how they respond to the question. For instance, if you detect a sense of urgency to sell the home, ask about their ideal timeline to close and find ways to craft an offer that takes that into consideration.
Some answers may also give you a hint on whether or not it’s worth pursuing closing the deal in the first place.
2. Don’t shy away from probing further
Getting timely information from your counterpart is crucial to any negotiation effort. Before you make a serious offer for that house and lot for sale or condo for sale, consider a few more probing questions like:
- Are you an authorized broker or representative of the owner? If you’re not sure whether or not someone is fully representing the interests of the owner or owners, best to clarify that to avoid major complications down the line.
- How long has the home been on the market? A house or condo that’s been on the market for months or even years may be an indication of underlying problems — structural or otherwise.
- Are there any title problems? You’ll want to make sure you’re dealing with a clean title. Existing liens or disputes concerning the property can haunt you long after the sale has been completed.
- Is the selling price negotiable? Unless it’s already stated in the listing or elsewhere, clarify if the seller is willing to budge on pricing.
💡Don’t know what questions to ask? Seek out an expert’s perspective
There’s a host of questions you can ask someone who is in the market as a seller. The specific information you’re looking for will mostly depend on the property in question — its location, condition, proximity to schools and urban centers, etc.
If you’re not sure whether you’re asking the right questions, it may be wise to consult a professional. But don’t just ask any agent or broker. Make sure they’re knowledgeable about the local area, from pricing trends to the top neighborhoods to consider.
Check out our directory of agents/brokers in the Philippines. These experts won’t just tell you what questions to ask. They can give more practical tips on how to negotiate in real estate.
3. Stick to your non-negotiables
There are must-haves and nice-to-haves to consider as a homebuyer and you rarely get to have it all. List down and separate your non-negotiable items from lesser priority ones, whether it’s specific home features, neighborhood traits, or certain terms in the sale contract. Then stick with it.
A good rule of thumb to follow: if your non-negotiables far outnumber your negotiable items, you may need to review your list. Think carefully about the things you can’t live without and the ones you’re willing to part with.
Whatever your ideal scenario is, you’ll have a better chance of getting there by drawing a figurative line in the sand — and using that to guide your negotiations.
4. Look out for multiple offer situations
If you’re exploring homes for sale in a relatively hot local market, you may find more competition than what you’re used to. A sought-after home that you’re eyeing could be receiving multiple offers.
As a result, the seller may only consider buyers that are presenting significantly higher offers — potentially putting a strain on your budget. But even in a tempered real estate market, a crafty seller may find a way to initiate a bidding war between two or more competing buyers to artificially jack up the price.
A few pointers to help guide you in this scenario:
- Don’t be forced into a decision you’re not fully comfortable with. You can walk away from a bad deal and find a better home that’s within a reasonable price range.
- Go back to your list of non-negotiables. Ask yourself if the higher price is worth paying for, considering your homebuying priorities and life situation.
- Seek advice from a professional agent or someone who is fairly familiar with the local market. Friends and family may recommend or point to someone who has the local expertise you need.
5. Compromise can be a way forward
Buyers and sellers can find themselves in a stalemate, where no one is willing to make concessions. You could look elsewhere and move on when that happens, but you don’t always have to.
If buying the home has more advantages than disadvantages, it may be worth the time and effort to strike a compromise. Plus, if you have mutual connections with the seller (or even better, know them personally), you can potentially leverage that to get the result you want.
Again, remember to review your non-negotiables which will guide you on what type of compromise is acceptable — whether it’s concerning final price, contingencies, closing costs, etc.
6. Can’t lower the home price? Try asking for repairs/upgrades
If you’re dealing with a seller who is especially firm on pricing, you may have better luck negotiating for free repairs and/or upgrades — or “freebies,” as some would say.
What this does is it diffuses tense conversations around the money aspect of the transaction. By discussing repairs or improvements relevant to the property, you add a layer of negotiation that isn’t directly tied to the final sale price.
Here’s why It’s a win-win for both parties:
- Sure, the seller technically spends money to grant those requests, but these costs are usually negligible for them (depending on the condition of the property). So they’re more likely to agree to a few compromises, if they can keep their desired price point.
- On your part, as the buyer, you improve the home’s livability and long-term value without cost. Whether it’s replacing old windows, plumbing issues, or roof leaks, those problems will be addressed by the seller as a condition for the sale to happen.
7. Negotiate face-to-face
Nowadays, negotiation can happen in-person or virtually. But face-to-face negotiations are more likely to provide a better flow of information, which leads to better understanding between buyer and seller.
When done the right way, negotiating face-to-face allows you to add a layer of personal touch that can help you find common ground with your counterpart. Plus, when facing another human being on the other side of the table, it can be hard for anyone to deliver a definitive “no,” which has a tendency to shut down further discussion.
While it can be difficult to do at every step in the real estate process, try to meet physically for critical decision points.
8. Don’t let emotions dictate your decisions
It’s natural to feel a range of emotions throughout the homebuying journey. After all, purchasing real estate is one of the biggest transactions you’ll ever make.
That said, emotionally charged decisions can have catastrophic consequences in real estate. It’s important to always be even-keeled during negotiations.
A good way to keep emotions in check is to have someone a bit more objective providing helpful advice. That person can be someone you trust when it comes to big investments or a professional agent with relevant experience in real estate negotiations.
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