The Actual Negotiatons

As to the actual negotiations, most people will expect you to bargain, so do not be afraid to offer less than the asking price. Be careful, though. An offer that is too low may make the seller mad and kill any chance to reach a compromise, especially when the seller has made previous reductions in the price, or is asking less than what was paid for the home.

Normally, somewhere between 85 and 90 percent of the asking price usually is a good first offer on a used home. On a newly-built home, I usually start a little over 90 percent of the builder's asking price, because builders generally do not have as much room to negotiate.

For instance, if the seller of a used home is asking $100,000, the taking price is probably in the low to mid 90s, so make an offer in the mid 80s. Then increase the amount of your offers to a predetermined target price, $93,000, above which you will not go. If it's a newly-built home, start at $91,000, planning to go as high as $96,000.

You might also decide to give up some of the provisions in your offer to which the seller has strong objections. Each thing you give up, though, should be matched by a concession in price, terms, and so on by the seller. Let the seller know he or she is buying the protection that you are giving up.

During a slow market, or if there isn't a threat of a competing buyer, a good technique is to never accept the seller's offer, even it is at a price the buyer will ultimately pay.

Suppose you offer $74,000 on an $82,500 home and the seller counters $78,000, a price you will pay. If you accept the $78,000, you have the lost the opportunity to get the home for $76,000 or $77,000. So make another offer at $76,000 and wait.

Unless there is a competing buyer, there is little risk in doing this, because the seller isn't going anywhere. On the other hand, your money is very portable, and the seller may be getting worried about you tiring of the game. You can also use this technique to negotiate the amount and terms of any paper the seller might hold, what appliances will go with the home, and so on...

At the Bargaining Table

Often you can gain advantage in the negotiations by sitting down face-to-face with the seller. This is especially true when you are familiar with the subject matter and the seller is not. Real estate agents can almost always get the seller a better deal than the seller can get alone, and this is one reason the seller's agent will not want you or your buyer's broker to see the seller during the negotiations.

You can get around this very easily by saying you will not proceed with negotiations unless the seller is present. Bargaining face-to-face with the seller is usually the most productive after the negotiations have been going on for a while and you have gotten the seller or his or her agent really interested in your making a deal.

Back to Business

Back to the comfortable Shenandoah Valley and home-sweet-home, Virginia, and it is time to buckle down and get the eyes on the prize, negotiation!

Many books have been written about negotiating, and you should read one. In general, disclose as little as possible about yourself and learn as much as possible about the seller. The more you know about the seller and the less the seller knows about you, the stronger your bargaining position will be. You should also be patient, polite and act understanding of the seller's needs, while being firm about your own.

Finally, find out what the seller's deadlines are (date being transferred out of town, date contract on seller's next home will expire, etc.), and let them force the seller to come to you. The closer the seller is to his or her deadlines, the more concessions you will get.

Four other rules of good negotiating should be mentioned: (1) if you aren't willing to risk losing the house, you will not be able to negotiate as well; (2) get the seller, and his or her agent(s) to invest as much time in you as possible, which will make them concede more if it looks like you are going to go away; (3) the longer an agent has been working on the deal, the sicker he or she will be of it and the more he or she will pressure the seller to make concessions to you; and (4) set a top limit in your mind that you will pay and stick to it.

The concessions you will get from the seller may also depend on other factors such as: how well homes are moving in general; how long the seller's home has been on the market; whether the seller is trying to buy another home; whether seller is in distress; whether you can make an offer that will not require the seller to hold paper; whether you can make an offer that does not hinge on something iffy, like selling your home; how much the seller has in the home; whether there is a competing buyer, and so forth.

If you are buying a newly-built home, find out how many unsold homes the builder has. The more houses there are, the weaker the builder will be.

City Mouse, Country Mouse

We took the kids this weekend up to NYC for nice break from the ho-hum country life to explore the ins and outs of the big city. Meeting up with a few of the in-laws and packing the kids in the car at 4am for a road trip up I-81 and away we went.

As we crossed over to I-78 and passed through the beautiful Lehigh Valley, Allentown, Easton and Bethlehem, Pennsylvania we enjoyed the travels across an area that in many ways reminded us of the Shenandoah Valley in Virginia.

As we cross into New Jersey and closer to Manhattan, we began to see more and more signs that the concrete jungle of the Big Apple was within our reach.

The kids were very excited to see the tall buildings and a glimpse of the Statue of Liberty as we passed through Hoboken, Weehawken and Hudson County, NJ overlooking a quick hop, skip and a jump to New York City; our adventure had begun.

The Real Dangers

Contrary to popular belief, people problems, not title problems, will be your main concern. You will be able to eliminate title problems by requiring that the seller furnish a warranty deed, marketable title, title insurance and a survey. However, none of those will protect you from your own ignorance or weakness as a negotiator, or someone else's dishonesty or greed.

Emotions will blind you...

The beginning, not the middle or end, determines how most investments turn out. Yet buying a home is such an emotional event for most people that they are unable to treat it as the truly significant investment that it is. Rather, they can only thing about things like: how to decorate the baby's room, what color to paint the living room, how nice the pool will be in the summer, how beautiful the flower garden is in the back yard, how happy they will be to invite over family and friends or what improvements they may like to make down the road.

Furthermore, most home buyers are so unfamiliar with the legal and factual aspects of buying a home and the potential dangers or risks involved, that they lack the confidence needed to be assertive or to protect themselves, even when the need to do so has become crystal clear.

Many are reluctant to engage in tough price bargaining and often pay more than the seller would have taken. Others forego a thorough professional inspection, because the seller assure them that it's a good home or everything has been fixed or is up to grade.

Speaking from experience, don't let yourself be swept away in the frenzy of the home search. Protect yourself from your own ignorance of the process by taking your time to fully explore, examine and research each and every situation.

Our VA Realtors, including Virginia Beach real estate agents, will answer your questions and help you consider all the factors affecting your decisions.

Seller Obligations

What the seller must tell you: The seller of a new or existing home must disclose any hidden and dangerous defects that he or she knows about (faulty stairs, unstable supports, loose railing); the seller cannot cover up defects to prevent you from seeing them (painting over water damaged areas on a ceiling that would give away a roof leak); and if you ask any questions about the home, the seller is supposed to answer them truthfully.

At the same time, if you are buying a used home, it can be difficult to determine what the owner new about and what is exactly hidden or even dangerous. It can be hard to prove that a seller new about a truly dangerous condition, such as rotten flooring and sub-standard conditions.

In this manner, it is very important that you do all that you can to protect yourself before paying any money or signing anything. A preliminary investigation or inspection, a good, protective contract of purchase, and constant vigilance are basic requirements.

The Sign of an Ethical Agent

The sign of an ethical Va Beach real estate agent, should identify whether they work for the seller and if they do, the Realtor® should say somthing like this to you upfront:

I want you to understand that I represent the seller, who pays me, and I cannot do anything for you that would hurt the seller. I will take any offer from you to the seller, but I cannot negotiate for you against the seller. If you fell you need help during the negotiation, then you should get someone else to advise you, such as a buyer's agent. However, I will do my best to help you find a home and financing that suits you.