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The Art of Negotiation
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JamesMcNault
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Negotiating the price on a home is an art that requires careful thought before any action. Too often would buyers, and even their agents, send outrageous offers that most sellers just dismiss them as a joke. There are lots of books, seminars, online materials and other resources that teach how to negotiate effectively, but it seems most are disregarding them and just begin negotiations without consideration.
Before you offer that initial price, try putting yourself in the seller's shoes and imagine how they would react. Would you consider it or just trash it? Having a good idea of the value of the home is critical to building a connection with the seller. Your realtor can provide you market analysis of recent sales in the area to determine the prices of similar homes. This should be your main weapon for initial offers.
More ammunition can be gleaned by doing a little research on the home and its owner. How long has the home been in the market? Owners are more apt to consider lower offers if they've been trying to sell for a long time. How many price reductions has the house gone through, and for how much each time? If the house has had a lot of reductions already, the owner may just ignore more price cuts, as they would be likely thinking of how much the price has fallen already from the original listing price. Remember that only 10% of sellers are highly "motivated."
A good technique in proceeding with negotiations is getting the other side to agree on small things first. Gaining agreement on several small points will relax the other party and will tell them that you are reasonable. Do this so that in the end all that's left to talk about is the price, and they may concede to your wishes just to end negotiations and close the deal.
As a last reminder, in your mind, settle on a price and commit to it. Even if you don't offer it, use it as an anchor to remind you of your limit.
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