Open House
Welcome to Open House, a News Tribune blog on the real estate industry and its curious musings, gossip and yes, even facts and analysis.


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More real estate blogs:

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Tacoma and South Puget Sound Real Estate Blog
Tuesday, July 15th, 2008
Posted by Devona Wells @ 12:53:08 pm

I ran across a list of seven home price negotiating blunders at U.S. News and World Report and thought I’d pass them along, add some of my thoughts and ask for some of yours.

1. Not understanding the seller. In a home price negotiation, it's essential to look at the deal from the opposite side of the table. "You want to make best use of the seller's fears," says Ed Brodow, a negotiation expert and the author of “Negotiation Boot Camp.” So the question is: What are the pressures on the seller of this house?"

Good things to be aware of, but you never know who's paying the mortgage. If the seller has taken a job out of town, her new employer could be footing the bill. A young military family already transferred? Their parents could be covering the cost until a good offer comes in.

2. Forgetting your homework. Some of this needed information is readily available. You can get the sale prices of comparable homes and discover how long certain listings have been on the market from a real estate professional or an online resource, says Joshua Dorkin, the founder and CEO of real estate networking and information site BiggerPockets.com. To find out the seller's motivations, try getting in touch with him or her directly. Some will refer you to an agent, but others will chat candidly.

Any buyers out there ever called the seller directly? If the seller was represented by an agent, I would always assume that’s the point of contact. But perhaps not?

3. Showing your cards. While looking for information on the seller, it's important to divulge as little about yourself as possible. Any knowledge you provide could be used by the seller as leverage.

I’m always surprised how much agents say is given away in negotiations, from appliances to information used to knock good money off the price.

4. Not having options. When you begin negotiating on a specific property, make sure you have identified several other homes you'd be happy with as well. Furthermore, it's to your advantage to tactfully—either directly or through your agent—let the sellers know that theirs is not the only property you are considering.

Easier said then done? Agents often say once you start seeing your furniture in a house, the game’s over.

5. Skipping face time. Instead of handling the negotiation process by phone and fax, it's important to meet the seller in person. If the transaction is being handled by real estate agents, the sellers should request that their agent get together with the buyer's agent in person to discuss the prices.

Makes sense and is probably doable in a slower market. But I also assume that given today’s reliance on technology that a lot (most?) negotiating goes via the computer, cell phone and/or fax machine.

6. Offering a specific number. When extending an initial offer, present a range of figures—say, from $420,000 to $450,000—rather than a hard number. An offer of a specific number that is considered too low could upset the seller enough to derail the negotiations altogether, says Cohen. A price range, however, affords you more flexibility.

I’ve never understood the supposed advantage behind offering a price range. If you offer a range, won’t the seller just take the top number? And wouldn’t a range leave you with less room to negotiate than if you offered something in the middle of your price range?

7. Getting caught up in the game. Remember, your goal is to purchase a home—not beat the seller. So what if the seller doesn't bring the price down as much as you had hoped? If you really like the house, the price has been reduced enough to fit your budget, and you've given the negotiation process your best shot, consider declaring victory.

Good advice. My favorite of the seven tips.

Any tips you'd like to add? Any of the above you've put to good use?

Categories: Misc.