One of the best reasons to hire a real estate professional to help you buy or sell your home is that they’re familiar with the art of negotiating, meaning they will likely save you thousands. Negotiating is a great skill to perfect, since you may need to work out a deal with a contractor, or as a landlord once you’ve bought the property. If you’ve decided not to list your home with a Realtor* here are a few negotiating tips you may want to employ:

Let the Other Party Speak First – If you’re dealing with a For Sale by Owner property, you may find yourself in some tight negotiations with more experienced negotiator. One of the best rules when it comes to negotiating is to always let the other guy speak first. There are two reasons you want to do this; because the first to speak is potentially giving away their bottom line, and they are also giving away some of their negotiating power. Now, it’s hard to get a Seller to speak first, since they’ve already listed their home at a specific price for a reason. One of the best tactics in this case is to look at how long they’ve been on the market. If the home has sat without activity for over two months, you may want to begin negotiations by asking if they’ve considered a price reduction. This will get some dialogue going on the price and lets the Seller know that you know the value of the home.

So what do we mean by “giving away your negotiating power”? Well, the first person to make an offer will inevitably set the ceiling or floor price, since you typically work towards the middle afterwards. Since many inexperienced negotiators feel most comfortable meeting somewhere in the middle, the second the speak holds much of the negotiating power. For Instance, if you wanted a home for $170,000 and it’s listed at $180,000, many buyers would start at $160,000. While a real estate agent can estimate the home’s fair market value for you, if you do your research, you will know whether a lowball offer will offend a seller or not. Surprisingly, many Sellers, especially those with FSBO properties, will use the tactic of overpricing their home to hope to “meet in the middle,” so it’s important to come in with the lowest fair offer to begin with.

*Side Note: Buyers should always take advantage of a Buyer’s Agent, unless they’re only looking at “For Sale by Owner” properties. For more information on why, read our “Why Use a Buyer’s Agent” article on our Baker Real Estate blog.

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