One of the main reasons I am so addicted to housing data, is because I am terrible at bargaining. I am a softy, which means I typically play good cop (getting very excited and emotional about an item, pointing out its attributes), while Mr. BT plays hard ball on the negotiations. These roles also tend to play out in our parenting styles as well =).
The best negotiating tactic, given my personality inclinations, is to play the innocent intellectual role, using data as my weapon of choice (I really love it, but I can't figure out why its priced 10% over comps). Hence the only suggestion I have been able to offer is to use publicly reported builder data as a basis for negotiations.
Yes I have time and a relatively low rent payment on my side….but becasue I don't bargain well, it just means I am likely to walk away, as opposed to trying to negotiate a better price or contract terms for the house I want.
All this to say, I would love to gather input on tactics that have worked for others. I will compile suggestions and put them in a separate post on the sidebar since I know many of you are finding homes that are now within range.
For example, a previous commenter suggested changing the standard contract text to allow the buyer to make multiple contingent offers, which I thought was pretty brilliant because it prevented sellers from shopping the offer.
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1st, get pre approved for your loan, make sure your money is available. Have the lender prepare a letter for you for the amount you want to pay. Unless they offer a sweet discount to use their lender, use yours.
Once you have done that, try to be able to be in a position to close within 10 days. Money talks, BS walks.
Now you are ready to negotiate.
Public builders are driven by quarterly results. 12/31 might be the end of a quarter. Check on it. If so, they'll be motivated to close anything they can by that date.
Have them throw in everything you want into their end of the price, closing costs, etc. YO can appeal to the assessor later to lower the price to the comps.
If that information works for you, you can thank a Realtor I listen to regularly.
I definitely like the idea of making multiple offers. I would probably just make the offer expire in 48 hours to put the pressure on.
If you really want to buy now then just pick your price and make some offers until one is accepted. Ill wait 'till sellers start asking for those outrageous 07 lowball offers...
Remember, preapproved, not just prequalified.
"Remember, preapproved, not just prequalified."
For some reason, I can never remember which of those terms is which.
Your advise about the letter with the amount you want to pay is a good idea. I had forgotten about that particular tactic. (i.e. don't use a generic letter with an amount higher than your offer, cause they will know what you have to work with)
Prequalified is based on what you tell the lender plus credit scores - pending a lot of review and underwriting - takes a few minutes to an hour.
Preapproved is the next process which puts you closer to close. . . just insert home, appraisal and amount.
BT,
I mean have that GFE ready and triple check it each time you get a new one. A prequal is just the maybebaby letter.
Low ball every house out there.Buyers are like gold now.Do not be afraid to make a low offer because you should not care who you offend or what they think.All they can say is no.
The strongest negotiating tactic you can have is to be willing and able to walk away. Period. Never forget the "golden rule." "He (she) who has the gold, makes the rules." Along with strong support (or even weak support) for your offer, be prepared to walk if you do not get what you want. I'm not suggesting rudeness, only that if you can't get everything that is important to you in terms and price, say "thank you very much." Then about 3-7 days later, followup with a telephone call and ask if the seller has maybe reconsidered. (I have found my agent has a knack for this, but I'm not sure how she does it.)
And if you would like the "multiple contingent offer" language, let me know and I can email it to you.
Offer what you are willing to pay, not what they want.
Whenever they tell you that you can afford more, look at them wide-eyed and say "I don't understand how!" and maintain that position. "Well, I don't know how other people can do that", "I just know what I'm comfortable with" , "I can't afford that!" and "I understand what my credit report says but I still can't afford that!" Repeat on an endless loop until they accept your offer. Your offer may include agreeing with them that you're willing to pay too little and then offer to walk away and stop wasting their time.
It worked for me (genuinely the first two times) and subsequently one more time on major purchases (one house, two cars).
In effect, you are agreeing with them that your offer is ridiculous while still standing your ground as to what you are willing to pay. I think it accepts every emotional/manipulating argument they throw at you while still acknowledging your own level of discomfort at overpaying what your comfort level is.
Either they'll accept it or you can walk away knowing you didn't take on too much risk for your comfort level.
Honestly, I was a horrible negotiater until this happened to me multiple times. I ended up owning all three items. That's when I began to understand that every price is fluid.
The higher the ticket price, the more room there is for negotiation.
These were all items that I was emotionally attached to but willing to walk away from if I wasn't comfortable with the final price. I had done my research and let them know it and also let them know that I was willing to move on to something else (developer or car dealer) if the item was out of my reach).
Good luck! There's no "one" house or car for anybody. There are many many options. Never let yourself forget that...and never let yourself be "flattered/shamed" into overpaying for a big ticket item. It doesn't matter what you can afford, it matters what you are comfortable paying for that item.
Sorry for the long post.
-Wordy McWordison (aka "curious")
Some thoughts...
Make it simple and quick - present your best-case offer and consider only one counter-offer that you will take or leave. Be prepared to say "thank you, but that's not what you are looking for, but good luck" and walk away. In this market, they usually call back.
If you are working with a buyer's agent, never let your agent know what you are willing to pay. In fact, don't tell your agent anything that you wouldn't want the sellers to hear. You never know what can accidentally slip out of an agent's mouth during negations.
Usually I feel so guilty putting in a low offer cause I know my means are substanitally above theirs....like when bargaining in a third world country or at the swap meet. (And yes I know in many cases they expect us to bargain...sigh)
But with a house, it represents such a huge chunk of our income, I am determined to not pay more than I feel comfortable with.
Paul please do e-mail the language Paul.
Would Paul be willing to let you put the multiple contingency offer language in a on your sidebar so we all could access it?
a lot of good information posted here. I'd add:
Understand the seller's situation to see if there is opportunity for a deal. Sometimes they don't need to sell.
Start a little less than your final so that you have some room to play the game for few days, make the realtor's feel like they added some value, and make the seller fell like they won..
"buyer is making multiple purchase offers on multiple properties with the intention of only accepting one contract. Acceptance of this offer is contingenent upon buyer cancelling other offers. . . "
should work.
(since your contract is also usu. contingent upon financing, the lender deal will usually creat another out for you)
woot! Finally some advice I can use from Sippin.
Now to check around my desk for caltrops or small incendiary devices >; )
Paul, your agent sounds like a gem. Does she work Roseville/Granite Bay? If so, I might be interested in talking to her....
G Spot1 - Sorry it took me so long to respond. Yes, she lives in GB and her office is in Roseville. Email me at mthiker2004@ya...com and I'll give you her contact info.
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