Negotiating a Purchase Agreement
Start with a fair price and a fair offer: When sellers significantly overprice their homes, it turns off potential buyers. Likewise, making an offer that is far lower than the asking price is practically guaranteed to alienate the sellers. Asking and offering prices should be based on recent sales prices of comparable homes. The condition of the home is also a point that can be used in negotiations. If the buyer will be forced to replace old, worn carpeting, for example, the seller should take that into consideration when considering an offer that is below the asking price.
Respect the other side’s priorities: Knowing what is most important to the person on the other side of the negotiating table can help you avoid pushing too hard on hot or sensitive issues. For example, a seller who won’t budge on the sales price might be willing to pay more of the transaction costs, or to make more repairs to the home. On the other hand, a buyer with an urgent move-in date might be willing to pay a higher portion of the transaction costs or forego some major repairs.
Be prepared to compromise: “Win-win” doesn’t mean both the buyer and the seller will get everything they want. It means both sides will win some and compromise a little. Rather than approach negotiations from an adversarial winner-take-all perspective, focus on your top priorities and don’t let your emotions get in the way of your better judgment.
Meet in the middle: Having trouble deciding who will pay the recording fee? Do you disagree on a close-of- escrow date? Are you arguing over cosmetic repairs? Split the difference. Splitting the difference is a time-honored and often successful negotiation strategy. Pay half the fee. Count off half the days. Fix half the blemishes. Both sides will come out ahead.
Leave it aside: Politicians and corporate executives are famous for their “for future discussion” agreements. If you have a major sticking point that isn’t a major factor in the overall contract, finish the main agreement, and then resolve the other difficulties in a side agreement or amendment. This technique allows both sides to recognize and solidify basic areas of agreement. They can then come up with a fair compromise on other terms and conditions. Summarizing the points of agreement in writing is another helpful strategy.
Ask for advice: Successful real estate agents tend to be experienced negotiators. In countless real estate transactions, they have seen what does and doesn’t work. They have also established a track record of bringing buyers and sellers together. Consult your agent about negotiating strategies, win-win compromises, and creative alternatives.
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