Finding success purchasing real estate isn’t always something that comes easily. The past few years have conditioned people to be afraid of losing money in the market, but the good news is that things are currently looking up as the real estate market gets back on its feet again. It is still a buyer’s market; however, so taking advantage of the present situation can be a great investment opportunity. Finding great properties and agents can come easily; learning to negotiate as a buyer is where people can almost always learn to improve their skills. If you need to improve your negotiating skills as a buyer, read on to learn some tips for developing great skills that’ll help you through any deal.
Pay Attention to the Market
Knowing which way the scale is tipping is a very important thing to heed. The market can sometimes equal out to the point where supply and demand are pretty much aligned. What is more likely, however, is that it will be tipped to favor either the buyer or the seller. As a buyer, try to avoid purchasing something when there are reports out about how things are shaping up to be a great seller’s market.
For example, let’s say that you begin searching for homes without researching the market first. You may find a house in a neighborhood you like, and end up paying quite a bit for it because you failed to seek out information that revealed it was a seller’s market. Two or three years down the line, your friend may come along and purchase in that same neighborhood but spend $100,000 less because he waited for the market to switch. You want to buy when it’s a buyer’s market, because you will have more leveraging power.
Learn who has Leverage
Try to do some research about the properties you’re interested in. When you have a little background information, you can use that to your advantage. For example, if you’re interested in buying a property that already has ten other interested buyers, the chances that you’ll come out on top are relatively slim. However, if you are looking at a property that has been for sale for months with almost no hits on it, you’ll have a much better chance of tipping negotiations in your favor because the seller will want to get the property sold.
Another example in this situation is to be aware of the condition of the property; not its physical condition necessarily, but whether or not it’s a short sale, foreclosure, or has another kind of contingency or stipulation involved. You will have leverage over a seller who is in a tight spot or a bank that is trying desperately to get rid of a property, and this can help you get the best deal.
Prepare Your Financing
If you find a perfect property but don’t have your financing situation figured out, there’s a chance that you might let the house slip through your fingers when a prepared buyer comes along. See if you can prequalify for a loan ahead of time. This won’t guarantee that you will get to purchase the property (other things like survey results or title issues can hamper that) but it means you have a better chance at doing so, particularly if there are other buyers who have not qualified.
Think about this: you are interested in a property that has nine other potential buyers. You happen to be the only one of them who has already prequalified for a loan. Put yourself in the seller’s shoes and think about which buyer you’d likely select if you’re motivated to get the house sold. It would be you, right? Any financial benefit you can bring to the table will help you procure a property faster and put you ahead of the game.You won’t be considered a risk, and your negotiating prowess will be considerably increased.
Real estate brokers have always been around to represent sellers. What has not always been so common, however, is a broker representing a buyer. This practice is becoming more commonplace, but there are still buyers out there who believe they can handle everything and see a broker as an added cost. Many times, however, it’s a cost that is absolutely worth it. Just think about it: how much experience do you actually have with buying properties? Are you willing to risk your purchasing opportunity, and possibly lose the property, just because you think you know best?
Let’s say you decide to enter into a real estate transaction without a broker. The seller has a broker, who presents you with a contract that has certain points in it that you really don’t understand, but you decide to trust the broker anyway and go ahead and sign. With your lack of knowledge, you signed on to buy a property with a 60-day closing process. As you can see,going without a broker can sometimes leave you at a big disadvantage. Having someone knowledgeable about contracts and purchasing can really help you when the other side has that as well.
Real estate negotiations can seem intimidating, but they don’t have to be. With a little negotiating finesse, you can come out on top as a buyer. Remember to do your research, prepare yourself ahead of time, always keep your eyes peeled, and don’t be afraid to call in some outside help. Making it a habit to incorporate these things can ensure that you’ll always win as a real estate buyer.
Peter Smith hopes that his interest regarding the real estate business comes through the above article. He is a negotiation specialist and generally blogs for sites like thegappartnership.us.