6 Real Estate Negotiation Tips for Buyers and Investors
Purchasing a home or rental property is an extremely large purchase. As such, it’s important to practice negotiation skills while buying real estate to ensure you get the best deal possible. However, negotiating a deal in real estate is easier said than done. So, read along as we go over some real estate negotiation tips for investors and what to avoid while buying an investment property.
Contents of This Article:
- When Do You Negotiate in Real Estate?
- 6 Real Estate Negotiation Tips for Investors
- What to Avoid While Negotiating in Real Estate
- Protect Your Investment Properties With Ease
When Do You Negotiate in Real Estate?
Whether you’re an investor, landlord, or property manager in Northern Virginia, it’s important to know how to negotiate real estate deals. After all, there may be several instances where you negotiate prices, dates, or terms for your rental properties. Some of the most common negotiations while buying a home include:
- Purchase price
- Closing Date
- Closing Costs
- Attachments to the Home
As you can see, there are several opportunities to negotiate deals in your favor while buying real estate. One of the main points of negotiation is the purchase price of the property. While buyers don’t want to overpay, sellers don’t want to settle for too low of a price. As such, negotiations take place to find a middle ground for both parties.
The same goes for nearly every aspect of the sale. For instance, you can also negotiate closing costs and the closing date. Closing costs are generally a small percentage of your total loan amount. However, you might be able to negotiate a deal with the seller.
Additionally, if you need more time to close on the property, you may be able to negotiate a more desirable closing date. Most buyers close near the end of the month to pay less in prepaid interest and lower total closing costs.
Before the sale, sellers must disclose what they’re taking with them in the move. So, during this time, you may be able to negotiate what they leave at the property, like appliances or other attachments. Next, let’s go over some essential real estate negotiation tips to keep in mind while buying properties.
6 Real Estate Negotiation Tips for Investors
Whether you’re a first-time investor or buying your 10th property, it’s never a bad time to strengthen your negotiation skills. After all, practicing a few simple negotiation strategies can help you close more deals and increase your income. Follow these real estate negotiation tips to ensure you meet your investment goals.
- Know Your Goals
- Research the Market
- Set Your Budget
- Be Prepared to Walk Away
- Negotiate In Person
- Use Affirmative Language
Know Your Goals
Successful real estate negotiation deals start with assessing your goals. After all, if you’re not sure where you want to invest or what type of property you want, it’s hard to get started. As such, it’s crucial to set clear goals for your investment and follow them throughout the process.
For instance, perhaps you’re looking for a single-family property in a popular Philadelphia location. Once you have a starting point, it’s easier to look for applicable properties and find negotiable deals.
Research the Market
The first step in negotiating a real estate deal is educating yourself and knowing the market. Once you know where to invest, you’ll want to research that specific market. Compare your potential property with recently sold properties in the neighborhood to see what they sold for.
Once you have a good idea of what other investors paid, you can determine which properties fit your budget. Additionally, this research can help you make a reasonable offer and back it up with evidence from comparable home sales.
Set Your Budget
Buying real estate is a huge transaction that includes several costs besides the initial purchase price. As such, setting a budget right away can help you negotiate more effectively. That said, it’s important to include all of the costs in your budget, including closing costs, renovations, legal fees, taxes, and more.
Be Prepared to Walk Away
Not all real estate deals are going to work in your favor. After all, you and the seller are trying to get the best deal possible, and you may not agree on any price. As such, it’s important to know when to walk away from a property.
For instance, if you don’t take time to think about the deal, you could end up paying more than a property is worth. So, even if you find the perfect property, you might want to consider moving on if you can’t agree on the perfect price.
Negotiate In Person
Although technology makes it easy to do nearly anything virtually, it’s important to negotiate real estate deals in person. After all, communicating over text, email, or via phone call leaves a lot of room for interpretation. However, a face-to-face conversation can ensure everyone is on the same page and that nothing is left unsaid.
If you’re negotiating a deal with a long-distance seller, it can be hard to find time to meet face-to-face. So, in this case, it’s best to speak over the phone and avoid discussing important matters over text or email.
Use Affirmative Language
Real estate negotiations are serious conversations, and the best investors are firm and direct with their expectations. The middle of a real estate negotiation is not the time to change your mind or doubt yourself. So, use affirmative language and remain confident throughout the negotiation.
What to Avoid While Negotiating in Real Estate
While it’s important to focus on good negotiation tips, knowing what to avoid is also helpful. After all, you don’t want to lose out on a deal because you made a crucial mistake. So here are a few things to avoid while negotiating in real estate.
- Being Unprepared
- Getting Emotional
- Focusing Too Much on Price
Being unprepared to negotiate is a major mistake. Although you may know what you want to say, if you don’t prepare beforehand, you could lose your main message. As such, before negotiating a deal, write down what you want to say, practice, and take notes throughout the process.
A good negotiator will hide their emotions during a real estate negotiation. Even if you’re really hoping to score a deal, it’s important not to let your emotions show, even if you don’t get what you want. After all, your reputation as an investor is on the line, and showing confidence and professionalism is key.
Focusing Too Much on Price
Although you want the best price possible, you can also negotiate terms. So, don’t focus too much on the price, but think of what else you can negotiate if it’s not the purchase price. For instance, you could offer a better closing date for a lower price. Or, you could suggest more favorable terms for their asking price.
Protect Your Investment Properties With Ease
Negotiating a real estate deal is the first step in buying a rental property. Once you’ve completed a real estate negotiation and closed a deal, it’s time to consider property management. Property management includes finding tenants, maintaining rentals, handling finances, marketing properties, and more. As such, it helps to find a full-service team to help with these tasks.
Bay Property Management Group offers comprehensive rental management services for landlords in Baltimore, Philadelphia, Northern Virginia, and Washington, DC. Contact us today to learn how we can help your rental business succeed.