Negotiating to purchase a home can be an daunting process, especially in New York City – which is one of the most competitive places to live and work. The competition in Manhattan to purchase residential real estate can be fierce! However, if you find yourself in a situation where you have to negotiate against multiple offers to purchase your ideal apartment, remember the four P’s: be Prepared, Plan, be Proactive, and Personable.
Even though it may be tempting to negotiate on your own behalf, most people feel uncomfortable doing so because of lack of expertise and objectivity which may undermine your effectiveness. For this reason, I recommend using an experienced broker who has a good track record in and understands the nuances of negotiation. This usually is a crucial part of the purchasing processes of a home where you can feel satisfied and pleased with your purchase.
- Have your professional members who would be involved in the purchasing process ready including: real estate broker, attorney, and mortgage broker.
- Have your papers in order: a completed REBNY financial statement and mortgage pre-approval letter, should you need a mortgage.
- Know what’s on the market and what has been sold recently – with this knowledge, you’ll be able to establish a well-educated value and its relevance to your intended purchase.
- Learn as much as you can about the seller: their profession, age, cultural orientation, marital status etc. More often than not you can find much of this information online which can greatly enhance your understanding of the negotiating style of the seller and help you negotiate much more effectively to reach a mutually beneficial deal.
- Ascertain the seller’s motivation which gives you a much better sense of how flexible he or she may and how eager they want to sell which would have a direct effect on the ultimate purchase price. A cautionary note, do not assume that anything about the seller’s motivation to sell unless you can verify that, because the wrong assumption may prolong the negotiating process and could end up in failure.
- Planning any negotiating process require special skills and extensive experience. In order to negotiate effectively and arrive at the best possible price you need an experienced broker who would develop a negotiating strategy.
- You should ask your broker to share with you his/der negotiations strategy and show you why and how he or she are taken this or that negotiating strategy. This would include the number of moves, the objective behind each move, and how this process of give-and -take will eventually lead to a meeting of the mind.
- Remember that even under the best of circumstances no broker, however skilled in negotiation, can gage exactly how the negotiations would evolve. That said, a negotiating strategy ought nevertheless be developed to provide you with a better sense about the process and why, for example you might have to pay more than you expect or how and why you might even pay less than anticipated.
- Finally, if you happen to be a skilled negotiator do not dictate to the broker how to proceed with the negotiations a step-by step, particularly because you are not in direct contact with the other broker who is representing the seller. You certainly can make some suggestions but let your broker utilize your ideas as he or she sees fit.
- When buyers are circling around a well-priced and desirable new listing be aware that the first person who makes an offer can have an advantage over others. Waiting is not always the best choice especially if you know the apartment is priced well and is a good deal when considered against other comparable unites.
- While the strongest offers are all cash, most buyers cannot afford this option. The next best option is to make an offer which is not contingent upon financing. This suggest to the seller that you are confident to secure a mortgage which is often treated as if you are an all cash buyer. Needless to say, you should check with your banker prior to making such an offer because you need to be comfortable with the risks involved.
- If you are financing, and would like a financing contingency, a pre-approval letter or commitment letter from a bank will be necessary. You can sweeten the deal for sellers by also putting down a larger down payment and end up financing a lower amount.
- Other terms that can aid in making a deal at the price you agreed to pay are related to:
- CLOSING DATE: If it is possible, make sure to offer to close the sale at the seller’s convenience.
- QUICK CONTRACT SIGNING: Another competitive posture is to agree to sign a contract within a short period of time and to facilitate that you would need a proactive attorney.
- Make a good impression on the seller’s exclusive agent by taking the time for a friendly chat when appropriate to give the broker for the seller a better sense of your sincerity. Seller’s broker often conveys his/her impression of the prospective buyer especially when they feel that the buyer is solid and enjoys a good reputation.
- Some buyers shy away from letting the broker or owner to know how much interest they have in a property believing that it puts them at a disadvantage. In fact, letting the broker about your interest and even enthusiasm about the prospective purchase works to your advantage as well as it demonstrates your level of commitment to buy that particular property.
- In a written offer, be sure to compose a personal letter and attached to your offer. In so doing you convey to the owner how happy you are at the prospect of purchasing his/her home. Given that most owners have deep sentiment and attachment to their home, they would want to sell their property to someone who appreciate the property and ‘loves’ it as much as they do. Writing such a letter is especially important under a competitive bidding scenario.
- If for whatever reason your offer isn’t chosen, let the seller’s broker know that you remain interested and ask that your offer is kept as a backup.
If you want to learn more about Negotiations or becoming an ‘expert buyer’ of Manhattan residential Real Estate, contact me for a meeting or for a free copy of my complete New York City Real Estate Buyer’s Guide by emailing firstname.lastname@example.org or calling 212-937-7011.Read More »
One of the most important qualifications of a real estate broker is his/her ability to negotiate effectively. Buyers and sellers ought to seek out brokers who have high level negotiating skills and use them to buy or sell their property. What makes a broker a skillful negotiator is not only understanding the negotiating process and navigating through the multiple issues that a real estate transactions entails. The broker’s effectiveness as a negotiator rests on a number of other critical areas of expertise, without which the broker cannot effectively negotiate and conclude a deal successfully.
Knowledge of the Market
Comprehensive knowledge of the market is sine qua non to effective negotiations, as the broker is much better equipped to deal with their counterpart to achieve better results for their prospective buyer or seller. The broker must have deep knowledge, especially in the area where a would-be buyer or seller needs to buy or sell a property and must know about every property that was sold and closed in the same category, apartments currently available on the market, current market trends (i.e. whether it is a buyer or a seller’s market), the demands for the property being sold or sought after. In addition, it is critical for the broker to know the price of comparable units in other areas of the market to provide the buyer or seller a wider range for comparison.
Understanding the Buyer’s or Seller’s Needs
Regardless of how critical knowledge of the market is, the broker must have a clear understanding of the buyer sand the seller’s requirements and needs. They must be certain that their understanding exactly reflects that of the prospective buyer/seller. This includes: 1) the motivation behind selling/buying, 2) the readiness, willingness, and ability to transact, 3) buyer’s/seller’s time frame, 4) prior experiences in the market, 5) understanding of the market’s trends, 6) flexibility a buyer/seller may have on pricing, 7) what their ideal deal would be, 8) how sensitive they are about their finances, and 9) how forthcoming they are in their dealings. To be sure, the more the broker knows about their cleints, the better they can negotiate on their behalf.
Appreciating the Buyer or Seller’s Psychological Disposition
Whereas understanding the buyer’s and seller’s requirements and needs is central to negotiation, understanding their mindset, emotions, concerns, anxiety, prior bad experiences, disappointments, need to safeguard sensitive information, and finally, their expectations must all be carefully considered to satisfy the buyer’s and the seller’s needs in these areas. Discerning their feelings and mindset are of paramount importance to the negotiating process because often buyers and sellers do not wish to disclose such sensitive information or feelings, because they may feel it works to their advantage throughout the negotiating process.
Developing a Negotiating Strategy
Before commencing the negotiations, it is critical to ascertain that a buyer is qualified financially to buy should he/she find the desired property consistent with their budget. It is also important to determine that that the broker for the seller and broker for the buyer are committed to working toward a successful sale.
Needless to say, without having all the information above, the broker cannot possibly negotiate effectively. But once the broker is satisfied that he/she has gathered and absorbed all the information they need, they will now be in a position to develop a negotiating strategy. To do so, the broker must first and foremost establish in his/her mind the fair market value of the property in question and how consistent that value may be with the buyer’s or the seller’s expectations.
It is critically important to establish a strategy at the outset in order to achieve the highest possible price for the seller or lowest price for the buyer. To that end, a skilled broker would sketch on paper the whole give and take of the negotiating process from the moment the initial offer is made. This basically provides a road-map that allows the broker to guide whomever they represent on the steps they should take along the way. All this must be generally consistent with what the buyer wants to pay and taking into account the price the seller is willing to accept.
There are dozens of twists and turns in any negotiation. What buyers and sellers need to know is that the broker representing them fully understands the intricacies of negotiations and shares with them the general strategy to give them a clear picture of the negotiating process. In the final analysis, buyers and sellers do not want a broker who simply carries messages from one party to the other. They want a broker who strategizes and has a keen sense on how to bridge the gap between the two sides while ensuring that both buyer and seller emerge mutually gainful. Indeed, this is the key that will help smoothly facilitate the signing of the contract once there is an accepted offer.Read More »