Powerful negotiation skills are essential for real estate agents, and knowing about the buyer’s priorities is a great way to improve your negotiation strategies. It’s important to use the strategies from our previous article, “7 steps to a successful negotiation,” whether you’re representing the buyer or the seller.
Negotiating is a give and take, ending in an agreeable resolution known as a contract. The more you know, the smoother your negotiation will be. A strong negotiation will reduce the stress on you and your clients.
Below are five tips on getting to know the buyers — whether you represent the buyers or the sellers — to improve your negotiation strategies.
How interested is the buyer in this particular home?
How would the buyer rate their interest level in the home on a scale of one to ten? 10 means they’ve got to have this house, no matter what. One means they wouldn’t care if someone else bought it tonight. Are you more motivated than the buyer is to get them into this home or are they asking what it’s going to take to buy the property?
Knowing where they stand on this scale gives you a lot of negotiating power. A buyer that has to have a property may pay a higher price, wave conditions or move at the seller’s pace.
How qualified is the buyer?
Most buyer qualification concerns are about money. If they are an all cash buyer, find out where is the cash coming from? If they’re financing, call the lender and review the lender’s approval letter. There could be different concerns depending on if the buyer is pre-qualified, pre-approved or loan committed? Regardless, they need to be comfortable in the price range the lender has approved them for. You should also find out if they have any contingencies. What about appraisal contingencies or waivers?
If you are representing the buyers, ask the lender to call the listing agent and vouch for the buyer’s pre-approval. This strategy has won many negotiations, sometimes even with a lower-priced offer.
What is the local inventory?
Competing inventory can affect a buyer’s interest level, time frame and motivation. It can also affect the seller’s willingness to negotiate. As an agent, knowing what’s out there as an alternative to the subject property is key to shepherding your buyers or getting the best price for your sellers.
Does the buyer have a contingency plan if this deal doesn’t work out?
Knowing your buyer’s living situation can shape the way you negotiate a deal. Are they on a month-to-month lease? Do they live with friends or family? Are there living in corporate housing provided by their employer? All of these factors could affect what happens if they don’t buy this one house. As the listing agent, you may be able to negotiate higher prices or better terms if the buyers are on a time crunch.
How flexible are their finances?
Discuss some probable outcomes with your buyers. If they are required to go over the list price — or guarantee an appraisal deficit — can they handle those extra costs? Don’t get your buyers in over their heads. If they can’t handle the deficit, they may need to be in a lower price range or have you find a home they won’t need to compete for!
Tim and Julie Harris host the nation’s #1 podcast for real estate professionals. https:// timandjulieharris.com/category/podcast has new podcasts every day. Tim and Julie have been real estate coaches for more than two decades, coaching the top agents in the country through different types of markets. https://PremierCoaching.com to get started for FREE today.