Negotiation is something most of us, if not all of us are familiar with and use on a daily basis. For example, you may negotiate a raise with your boss or if you are the boss, you may find yourself negotiating performance metrics and vacation schedules with your employees. As soon as you leave the office and head home you probably find yourself negotiating with your children over household chores or negotiating with your spouse over any number of things; such as dinner or television preferences.
It is no different when you are buying your first home or many homes as an investor. Developing a love for negotiating can help you get over any feelings of awkwardness that you may associate with negotiation. You can also feel empowered when you are able to purchase a property for a price that you feel is great. Make no mistake, mastering the art of negotiation takes skills and perseverance, but when equipped with the right skills, you can confidently handle anything that comes your way. Here are some tips that you should remember to maximize your negotiation skills.
Make the Second Offer
Making the second offer may seem counter-intuitive, but it is the best way for a buyer to increase his or her own bargaining power in a negotiation setting. When a buyer makes the first offer on a property, then a seller has the power to define the mid-point of the transaction. A buyer may offer to pay $100,000 for the home, and then a seller may counter with $150,000. Then, the buyer is forced to meet the seller halfway at a price of $125,000. However, a buyer can turn the tables by waiting for the seller to make an offer. The seller may make an offer of $150,000, but buyer can counter with $90,000. This reduces the mid-point and forces the seller to knock more money off of his or her asking price.
Listen During Negotiations
One of the golden rules of negotiation is to be quiet and listen. This may be difficult to do, but it’s a strategy that will pay huge dividends in the end. When a seller throws out an offer, the buyer should take time to consider the offer. He or she should sit in silence, because this gives the seller an opportunity to interpret the silence in his or her own way. The seller may interpret the silence as doubt or second-thoughts about the purchase price. This can cause the seller to make another offer with a lower price. Even though a buyer may feel awkward or uncomfortable in being quiet, the value of this time is priceless. A buyer can also have the time he or she needs to carefully consider the offer.
Obtain Information to Increase Your Power
Buyers should always try to learn as much as they can about a potential property. They should learn whether the property has any easements or other encumbrances that can cause the property to drop in value. You should also try to learn the motives that a person has for selling a property. If the seller is desperate, then you may use this information to your advantage to request a price reduction. Actively seeking out negotiation opportunities with probate leads can also help you succeed as an investor.
Fine tuning your negotiation skills takes time, diligence and hard work, but with patience, you can master the necessary skills to feel empowered throughout the negotiation process. Finely tuning your negotiation skills and implementing these three real estate investing strategies will allow you to keep your poise and gain control over and situation that may present itself.GUEST AUTHOR: Karleia Steiner. Karleia is a freelance blogger. Away from the office she enjoys spending time with her daughters and husband.