So you’ve watched my Real Estate negotiation tips for home buyers and sellers. This time let’s talk about other general strategies you can do to better your chances when negotiating to officially own the house of your dreams if you’re a buyer, or maximize your sales if you’re a seller.
Let’s get into it!
Real Estate Negotiation Tips and Strategies for Buyers
1. Manipulate Your Down Payment
Aside from getting yourself fully underwritten, reading disclosures, and potentially removing contingencies, there are also ways to make your down payment appear higher than what you intend to close with. For example, making the percentage of your down payment that appear on your offer to be 35% instead of 20%.
This usually involves showing cash from other sources. Sources that you could liquidate if you want to but don’t necessarily intend to, like your retirement accounts. Doing so will give you a distinct advantage if you’re stacked up against other several similar offers.
2. Relative Offer Addendum – Consider Adding an Escalation Clause
Adding an Escalation Clause is a great way to leapfrog yourself to the top offer without doing any back and forth in the negotiations. When you add this clause, you’re basically saying that you want to make an offer that exceed all other offers by a specified amount (by $5,000 for example) as long as it does not exceed your maximum cap of x dollars.
However, one little hiccup with using this strategy is that not all buyer’s agents understand this. Some agents don’t exactly know how to deliver this to the seller, so choosing an agent who can help you with adding an escalation clause may also be one of your considerations when choosing a buyer’s agent to represent you. After all, this strategy is really really effective and worth putting in some instances. For example, if you’re really close to being the top offer or if you think that the seller or their agent is bluffing you.
3. Write a Buyer Letter
Another way you can make the seller more inclined to accepting your offer is to make them feel good about choosing you. One way to do this is by writing them a letter. Tell them how great they are, how lovely their house is, how you’re going to take great care of it, and how you plan to build great memories there.
Doing so can really help your offer standout from your competition. If you get lucky, they might even be willing to accept a lower offer, just because they really feel good about choosing you.
Real Estate Negotiation Tips and Strategies for Sellers
1. Prep Your House
There are several ways to prep your house: great photography, beautiful staging, and disclosure packet that’s tight and clean, to name a few.
However, one thing you must really remember is that the buyer has to write you an offer to make anything official. They sort of hold the keys at this moment so it is important that what you’re going to present to them is attractive enough to actually get them to the table.
2. Consider the Other Top Offers
Let’s say you’re done prepping your house and you’ve already gotten several people to write you offers. The next thing you should do is to check if your top offer is really the best offer. For example, the top offer may be $20k higher than the next offer but it has a contingency. Since the $20k advantage may evaporate if they try to negotiate with you, there may be some instances when you want to lean more towards Offer Number 2.
What you can do is give Offer Number 2 a very short expiration window on their price—two to three hours for example. Doing this may cause them to feel FOMO—fear of missing out—which can be very powerful and mean that you get to close the deal with them right away.
3. Written vs Verbal Offers
Let’s say you don’t have a ton of offers in writing but you’ve received a lot of verbal offers. Your goal now is to get them to put their offers in writing. Remember, nothing is official until it is written.
Additionally, if you can get someone to go from verbal to written offer, this will give you more leverage to use against other offers. They may also want to write you a very compelling offer, which could mean that you’ll have a new top contender all of a sudden.
4. Write a “Dear Buyer” Letter
In the same way that buyers can write you a letter, you can also write a letter addressed to them.
Tell them about your experiences. Perhaps, about your neighbors agreeing to watch your dogs. The parties you had with your neighbors once a year. And how you’ve always enjoyed looking at the trees and bushes in the backyard when they are in bloom. Bring color to your experience there and give the buyer something else to feel good about purchasing your house. Give them a glimpse of what it’s going to feel like once they start living in your home.
Hopefully, by doing this, you’ll make them reach a little deeper into their pocket since your compelling story already made them more determined to prevail.
That’s it for my Real Estate Negotiation Tips and Strategies three-part series. (Read part 1 again here and part 2 here.) I’d also love to get deeper with you on this topic but since every negotiation is nuanced and you won’t really be able to predict the outcome until you see the other offers, feel free to leave a message if there’s any specific scenario you can think of that you need help with and I’ll also discuss it in my next videos.
I hope this list has helped you. If I can give you more context on the process of buying your first home, please do not hesitate to reach out. My information is below.
Here’s to all your success!