There are entire courses and books written on this subject. One of the older home renovations yet still interesting reads is Donald Trumps, The Art of the Deal. Being able to negotiate is not just important when it comes to real estate but the skills you learn can be used in almost every facet of your life. There are essentially two groups of people when it comes to negotiating, those that live for it, and those that live to avoid it. Regardless of which of these groups you fall into, here are some fundamental tactics you need to know to survive a negotiation session when it comes to buying or selling a home.
Knowledge is power. Its imperative that you have the most information possible on the subject property before entering into a negotiation. If you dont know what other homes in the area have recently sold for, the length of time a home normally sits on the market, the types of financing available on the home as well as what liens currently exist on the home then you might as well just hand the other person a blank contract and tell them to fill in a price they feel is fair.
If you dont know this information yourself then it is critical you work with a real estate agent who does and who you can trust. They can do the background research needed to make sure you get the best deal possible. They can also speak to the other party on your behalf and find out what their priorities are. Not everyone is always looking for the best price. Some people are more concerned with being able to close fast, or being able to stay in the property for a certain period after closing. Knowing what is most important to the other side gives you the edge to customize your offer so it has the best chance of being accepted.
For example, say you have a property for sale. You are asking $250,000 for it and you have several buyers interested and they are trying to talk you down on your price. You find out that one of your interested buyers has a child who is starting school next month and needs to be in this school district. They are running out of time and need to buy something now. If you didnt know this then you probably would have lowered your price repeatedly until someone agreed to sign a contract. Now, however, you can approach this buyer and tell them unless they pay full price the house is going to be sold to someone else. This knowledge of their particular need gave you the edge in the negotiation. Price was not the most important thing to them, quick access to the property was.
Be a problem solver. People all have problems, and its no different when it comes to buying or selling a home. Suppose you approach a seller who is short selling their home. They want to do the short sale instead of a foreclosure but they have a problem. Theyre not allowed to get any money out of the short sale transaction and they dont have any money to move out of the house. They are willing to sign the papers but just cant vacate the premises for you. Heres where some creative problem solving can save a deal. Lenders do not normally allow a buyer of a short sale to give any cash to the seller outside of closing. However, there is nothing preventing you from buying something that belongs to the seller. Lets say they need $1,000 to move and have a piece of furniture they dont plan on using. Buy that piece of furniture from them for $1,000. This is a perfectly legal transaction, both parties get a tangible benefit from it, and your seller now has the money they need to move out and let you buy the property and market it.
In any negotiation scenario you need to act decisively. Do your homework, find out what is important to the other side, and then act on that knowledge without hesitation.