Negotiating Strategies when Buying/Selling Real Estate

Negotiating strategy #1 – Negotiating use of a Seller’s equity when articulating your demands in your Offer to buy the home the Seller has on the market. 

I will be providing a How To lesson on:  Structuring and Negotiating the Offer you submit to the home-Seller by giving my written scenario fictional story example to give the situation factors involved in this opportunity to purchase a seasoned-owner home currently on the market.   Follow the facts and dollar amount figures.  Reason and logic through the expectations the buyer feels are worthy of requesting.

                The home I am selling is roughly figured to sell at the price of $189,900. but factored in is the unknown (negotiation room) and commissions for agents that may surface and feel their contribution was winning nudge tying the deal together and thus you want to count them into the deal paying 3 percent per side (both buying agent and selling agent reaping 3% of the Sales Price, each).

Seller sets the advertised price at $222,000.  Before long some smooth negotiators come by and see the home.  Showing no emotion and no passion about the home, they view and list the updating they feel is necessary to bring the home up to par.

The Seller gets a call from the buyers and the buyers offer (with "NO real estate agent" involved) the following:

$198,000.    Price to be paid for the home.

     10,000.    Buyers own money down.

 188,000.      Buyers to Finance the Net diff.

      6,000.      Seller equity to be awarded the home Buyer for their own rehab of the home and updating.

      4,000.       Seller contributed proceeds toward buying-down the Interest Rate for the Buyer financing.                                                 

          500.       Seller negotiates the Appraiser to be paid from the Settlement of Escrow by Title Officer.  

          200.       Home Inspection paid by the Buyers outside of Closing.

This ensures the Buyers will have the lowest possible house-payment since extra cash was thrown toward Discounting the Rate of Interest and beefing the Origination Points to butter up the Mortgage Broker so he/she has not the temptation to raise rates to fund backside points to which their Commission comes from.  Plenty of front side points for the Broker ensures the absolute lowest Interest Rate of the Loan Program can be utilized to calculate the house-payment.  {MoneyTip!!!}

The Buyers are $300.00 ahead on the entire transaction with $6000.00 cash coming to them at the Close of Escrow to refurbish the home as they see fit.

The Sellers net $187,500.00 from Sale of their Home.  Figured accordingly:

$222,000.     Initial Price of Home Advertised.

     24,000.      6% commissions NOT PAID to real estate agents.  None were involved, remember.  Inflated                                   price was reduced by this unknown factor.  Good Faith gesture on the part of the                                            Sellers  produced  a  price was that was fairly reduced. 

      10,000.        Paid toward Closing Costs of the Buyer for home remodeling  expenses/ updating home.

            500.         Appraisal Fee netted out of the Settlement at Closing and paid out to the Appraiser by                                  Title Company after Closing.

NEGOTIATION FORMAT and planning of your OFFER is critical to the buyers ability to close on the home he desires to buy.  Resources should be preserved in any manner possible for the home buyer.  This promotes a greater opportunity for long-term success in mortgage debt management and ability to stay in this home for as long as desired.

(Copy Editing done to this article was by Author Cheryl Miller-Eld on July 10, 2012)

                            (Originally Written July 5, 2011)

                by Cheryl Ann Eld  (MillerEld) Copy Editor for:                                                                                                     WSWwebdevelopment  and its web development projects