Both sellers and buyers want to get the best deal in a real estate transaction. That is quite reasonable, but success can’t be yours if you do not take the right steps.
All real estate transactions are unique. Sometimes the buyer wins; sometimes the seller wins. In some cases, the interests of both parties are fairly represented. In any case, neither party will get all that they want. However, by putting yourself in the best bargaining position, you can get the most benefits from the transaction.
There are basically 5 key elements that will determine the winner in a real estate transaction:
Consider market conditions
Sometimes we are in a buyer’s market. At other times, we are in a seller’s market. Sometimes the demand and supply are more or less equal. If possible, you should try to be in a market that favors your interests as a seller or buyer. That said, all properties and transactions are unique, so it is possible to overcome general trends. For example, if you are selling a home in a great neighborhood with few homes for sales, you will have no difficulty getting a good deal. Buyers who can close the deal quickly have an edge over others when it comes to dealing with a seller who wants to sell as quickly as possible.
Who has the advantage?
Generally speaking, sellers who are desperate to close quickly are unlikely to have much clout in the negotiating process. On the other hand, if you are eyeing a property that has received multiple offers, you will have to offer the best price if you want the seller to consider your offer.
It isn’t just about the transaction price.
In real estate, transaction prices are important. However, there is more to a deal than the transaction price. Consider this situation: 2 identical properties were sold for the exact same price on the exact same day. However, the deals may not be the same. One seller might have agreed to replace the roof or paint the property.
The second seller might have made no such offers or concessions. That means the first home was actually sold for a lower price although both homes have the same transaction price. If you are the buyer, this is definitely the deal you should eye for. If you are the seller, your goal should be getting the best price without having to sacrifice anything.
Financing may not be an option.
You need financing to buy a home. The fact that the buyer had a meeting with the lender before they started hunting for a home does not necessarily mean that financing is available. The lender can reject a loan application for several reasons including appraisal problems and survey findings. Still, buyers who have a pre-approved mortgage have an edge over others. Sellers prefer them because they represent less risk.
Generally speaking, when the interest rates are low more people will be interested in buying property. If there are more buyers, the sellers can rest assured that they will get the best possible price. On the other hand, nobody gains when the interest rates are rising.
Down payments used to be the biggest hurdle many buyers faced until a few years ago. But now some conventional lenders offer 100% financing to borrowers who have a good credit history. Reduced down payment requirement is good news for both sellers and buyers.
You need expert representation.
Brokers now represent both sellers and buyers. Earlier they used to represent only sellers. If the seller is represented by an expert broker and the buyer isn’t, the seller will obviously have an advantage at the negotiating table.
Before you buy or sell, be sure to consider the advantages of knowing the true value of a particular home. You can obtain a free home valuation report from Neighborhood IQ to find out how much a property is worth before you sign on the dotted line. Also, the Home Loan Advisor can analyze your property, current market conditions, local market comps, and other variables in our proprietary algorithm, and match you with potential lenders.