How To Negotiate
How to negotiate with the home seller
Buying a home in Bakersfield CA is one of the most important purchases most people will make. In order to make the right decision the first time, potential buyers need to be prepared.
As of February 2016, it is a very good time to buy in California. Interest rates seem to be improving and our economy is definitely looking better.
That being said houses in Bakersfield are selling fast. People are jumping on the opportunity to get into their new homes.
So what does this mean for you? It means there is stiff competition and where there is competition in real estate there are serious negotiations that can either make or break you in the long run.
Getting into bidding warfare can affect the way you do business and drive the price a lot higher on a home than you initially intended on paying for. Of course, when we pay to high you will have a very difficult time selling for a profit in the future.
A&A Realty has over 25 years of experience with negotiations and would love to be in your corner as a consultant.
Consider the following before starting negotiations:
Research the housing market in the target area. Once you have information about the general area, focus on the particular property and seller. Look for answers to questions such as:
- Why is the homeowner selling? (If they’re moving because they find the area undesirable, you might want to consider this issue.)
- How long has the home been on the market? (If it has been on the market for a long time, perhaps there are negative facts about the property that you need to know.)
- How much did the seller pay for the home compared to the current asking price? (If the seller paid more, find out why. Was it a general real estate trend, or did property values in that particular neighborhood go down?)
- What is the seller’s time frame for selling and moving? Does it fit within your needs?
- Are there any defects in the home or problems with the surrounding neighborhood? (For example, is the roof so old that it will likely leak during the next storm? Is there a new construction project in the area that will lead to major traffic congestion?)
As the potential buyer, you want the advantage. While you want answers to all your questions to the seller, reveal very little about your circumstances.
Do not give the seller personal information such as your income, the maximum you are able to pay for a down payment or the home, or when you want to move.
As expert real estate agents, we know not to reveal any such information to the seller or his/her agent. This may put you in a vulnerable position and give the seller the upper hand.
Also, do not let the seller see how much you want the property. If you appear desperate or overly enthusiastic, the seller then has the stronger bargaining position. When meeting with the seller or listing agent, keep your emotions in check. Calm and steady wins the race.
Establish a timeline and find out if the seller needs to have the sale closed sooner rather than later. If the seller is feeling pressured to sell, use that to your advantage in negotiating.
Even if you, the buyer, are the one with the deadline for purchasing a home, don’t let yourself be rushed into making concessions or a purchase you may regret later.
Defend yourself at all times
Wise words from the referee in a boxing match. Take those words to heart. Defending yourself in a real estate negotiation is crucial.
The key is to not be too eager or overly excited in the negotiation phase. Play it cool because that’s the old school rule.
Some of the best advice we can offer here at A&A Realty is to exercise all of your standard rights that are put in place for buyers protection. Contingency clauses are intended to shield buyers in some cases and we don’t advise to drop these clauses in order to go ahead with a deal.
There are a lot of risks the buyer is taking when they are agreeing to waive the option of dropping out.
For instance, let’s say for the sake of this post you as the buyer agreed to pay $250,000.00 for a home in Bakersfield CA. Then the appraised worth of the home was set at $220,000.00 due to needing repairs. In this situation, the buyer could be responsible for paying more than what that home is worth and some cases have to come out of pocket for the remaining difference which is $30,000.00.
When this happens the buyer is at risk to never see equity in their home if the value never jumps above what they agreed to pay for and you’re essentially agreeing to overpay for the home.
Another situation would be having to give up your down payment if you decide to back out of the deal.
That’s what we called letting your guard down during the negotiation phase.