Home Buyer Negotiating Mistakes – Part 2

Exhibiting Urgency. Few things sap negotiating power like exhibiting urgency. Agents smell urgency and will encourage the seller to drag their feet until you can’t stand it anymore and make a full-price offer. Remember, a real estate agent representing a seller is legally obligated to get the most money possible for the seller. If you have to be out of your house in 45 days because the buyer is closing and taking occupancy, keep it to yourself. If the seller or agent senses this, kiss your chances of negotiating anything goodbye. Remember, always play the reluctant buyer. You are looking at several attractive options and you are perfectly comfortable staying in your current house for the next year. Many times, if you are a serious buyer, the real estate agent or the seller will try to drag an offer, even a lower offer, out of you. Then you know you are shifting the momentum in your favor.

Trusting a Real Estate Agent to Negotiate for You. Don’t. Do. IT! As I said, real estate agents have little required training in negotiation to get a license. Furthermore, most real estate agents, even buyer’s agents, are still paid based on a percentage of the sales price of the house. And they are paid by the seller. Just think about the conflict of interest this creates. Consider that the seller is representing his or her best interests. The seller’s real estate agent is representing the seller’s best interests. The buyer’s agent (your agent) is getting paid based on what the house sells for so they are representing their own best interests. Who is looking out for you? You are. Ensure you know how to protect yourself. Because if your agent negotiates a better deal for you, that is money out of their pocket. This doesn’t mean that no agent will negotiate for you. There are some excellent buyer’s agents out there that will aggressively protect the buyer’s money. I highly recommend using a real estate buyer’s agent for a variety of reasons. Just make sure you have one of the good, experienced ones and not one that is protecting their money.

Offering Too Much Initially for a House. In negotiation, always offer lower than you expect to get. Offering too high doesn’t leave you sufficient room to arrive at your goals. People have an overwhelming tendency to end up in the middle of the range between asking price and offer price. That means you have some control in determining where the middle is. A friend of mine was recently negotiating a new home. The asking price was $349,000. My friend offered $275,000. The actual sales price: $310,000. What chance do you think my friend would have had in obtaining a sales price of $310,000 had he started out at $305,000? Zero. Remember, sellers price their homes high expecting to be negotiated down. Your first offer, and the manner in which you increase your offer, have significant influence on what you eventually pay for your home.

When you decide to buy your home, make sure you adequately prepare and avoid these costly mistakes. Understand that you must be the person looking after your best interests and that you may very likely be the only one. Gathering sufficient information and learning a few brown-bag negotiating skills can save you tens of thousands of dollars when you buy your home.