You’ve found your dream home.
It is perfect with the picketed fence and beautiful kitchen you have always wanted. It’s standing right there in front of you asking for an offer.
How are you going to nail this negotiation phase so the dream house doesn’t slip away? Can it be done without losing your shirt and not having any money left to do anything else?
Yes, it can be done, but you have to understand how real estate offers work and how to nail the negotiation phase.
Push And Pull
This is one of the best strategies you can use according to savvy real estate investors.
The idea is to ease into the negotiation. Learn 1-2 key components the seller deems to be important for the offer to go through. This could be the price, seller contributions, or something else close to their heart. They might be adamant this is what they require.
You, on the other hand, might just want the closing costs to be reduced.
So, now you can see the situation in front of you.
How can you get those closing costs reduced? You have to use the push and pull strategy.
This means you would go hard on what they want (i.e. price and seller contributions) but easy on the closing costs. In essence, you are making them work hard for what they want.
This encourages them to negotiate. They start pushing for their requirements to be met. This is when you swoop in and give them what they want, but throw in the fact you now require reduced closing costs. They won’t care because in their minds they’ve won the negotiation since you gave in, but that was the plan all along. You just took a longer route to your preferred destination.
This is such a great way to set up your offer and walk away with a huge smile.
Bend But Don’t Break
You will see some people get so enthralled with the process that losing is not an option for them. In their eyes, they have to do whatever it takes to get the house and that is it.
You can’t have this mindset because that is when you lose a lot of money and give them too much. There are many stubborn sellers who will try to break you and take everything, but you can’t let that happen. It is fine to bend a bit (i.e. sacrifice certain aspects of the offer), but not give it all to them.
If they get to that point, you just walk away and move on. This is how it is and they might even come back to you and say they want to change their mind.
It happens all the time in real estate.
Counteroffer Will Come
If all real estate deals were to be assessed since the start of time, the majority would have had counteroffers thrown in before anything was settled. It is almost mandatory for a counteroffer to come along from the seller. It is a natural reaction in essence.
The seller assumes you are not giving them enough and they produce a counteroffer. This is human nature because we don’t always expect the best from someone who is making the offer.
What you have to do is prepare the initial offer with one eye on the reality of getting a counteroffer.
Make the initial offer a little “out there” in terms of how crazy it is. This will give you more room to drop when you start making serious offers.
Meaning if the house is $500,000, tell them you will only pay $420,000. This is just a shock offer to get them started.
This is how you go through the negotiation phase while putting together an offer. Keep these things in mind because the offer is often the hardest part and it tests your nerves throughout.