Understanding Real Estate Negotiations as a Buyer
Although negotiations are something that many people perceive as stressful, in reality, it doesn’t have to be that way. Many negotiations actually go smoother than it may seem at first glance. You have the buyer that has the money to buy a house on one side, and the seller that has a house and wants money for it, which is pretty enough to get things going.
When it comes to Edmonton real estate, negotiations are usually done through representatives from both sides, and the better the representative, the better the outcome for the respective party will be. So rest assured that your HACK&Co agent is a trained negotiator that can help you with everything you need in the negotiation process – from the initial research to making the final decision about a property and closing the deal.
Because we know that negotiations can give you a raised heart rate, we want to help you understand the whole process better. Your Hack&Co partner will guide you through everything you need to know as it comes, but in general, every real estate negotiation passes through a few steps.
Step 1: Edmonton real estate market research
First we measure, then we manage. The best way to approach any negotiations is to first get a better idea of the market and the negotiation property. Let's say we are looking for homes for sale Sherwood Park. To find out if the market is similar to the Edmonton real estate, will use different methods and sources to gather information about the location, characteristics, & condition of the property at interest, as well as other houses for sale Sherwood Park area. Then, we will present them to you in a form of a “safe number” which is a sum we believe we would be able to sell the property for if we were to sell it in the near future. Based on this safe number, how close or far away it is from the MLS listing price, and how long the property has been on an MLS listing website, we plan out our negotiation strategy.
Step 2: Gather Intelligence from the Edmonton real estate agent
We do research on both the property, it's competition and the value of similar properties that have sold, and we also get familiar with the people we will be negotiating with. We search to see any profiles of the seller we can find, and also profile their real estate agent. Things as simple as how experienced they are, or more advanced if they have a known reputation can lead us to the most effective approach.
We also have a conversation with the other side’s agent prior to finalizing the offer with you to get a better feel of the situation and potentially discover information that could give us the upper hand. Even in limited information situations, your HACK&Co TeamMate will help you prepare a great strategy to reveal and influence the lowest offer the seller will accept. Communicating with the other Edmonton real estate agent can also shed light to some disclosures or things weren't aware of before that can potentially change the whole course of the negotiations or how much you’re willing to pay for the property.
Step 3: Form a Negotiation Strategy
Once we’ve gathered all the important information and we know what matters to you, we step towards the most important part of the process: forming a negotiation strategy.
If you've ever had a friend that made an offer before having a plan, that's what being lost in the woods looks like.
Every negotiation prep should have some key elements.
- BATNA (Best Alternative to the Negotiation at Hand) will help you understand if the deal is right for you based on the options you would have outside of this negotiation.
- Safe Number - an understanding of the market value of the property that will help protect your resale. This normally represents the goal number for the property.
- Find the ZOPA - (Zone of Possible Agreement) In a situation where a win is an agreement. There will be a zone where an agreement takes place. The research, planning, and "back-and-forth" are all used to locate and influence the outcome to our closest edge of the ZOPA.
Sometimes, negotiations reveal that the ZOPA is below our BATNA and that's time to leave the negotiation table to find a better option. In that situation, it's possible that our willingness to leave will change the other parties perspective and open other options in the future.
Brief Explanation Of The Negotiation Process
Most negotiations start when the buyer makes an offer to the seller on paper, then proceed in turns.
Let's say we were making an offer for some houses for sale Sherwood Park. We design an offer based on what we've learned so far, and when the offer comes to the seller, it's the seller's turn to decide what to do, and they have three options:
- Accept - in which case the offer becomes the accepted agreement.
- Decline - in which case the negotiation is over.
- Counter - in which case they will likely accept some terms and conditions of the contract and counter on terms and conditions of the contract.
The most common response for an initial offer is a counteroffer, but every strategy is different and sometimes a well-priced property should get an initial offer designed for acceptance before other buyers find it!
When an offer is countered:
- Counter offers are normally by phone, text, or email and communicated to you verbally
- When a counteroffer is received, we decide if we will accept it, decline it or counter it back again
- If we make an offer in the early evening, we can expect to reach an agreement later that night or early the next morning. Prolonged negotiations that last for a few days are less common and are usually a result of people having limited access to communication or complex work situations.
When the offer is accepted and an agreement is reached:
- In Edmonton real estate, when an offer is accepted all parties review the final terms of the agreement and show agreement by initialing and signing off.
- The pending period of the property starts. Usually, under the conditions of the agreement, other buyers can’t compete with the agreement until Condition Day has expired.
When the offer is declined and an agreement is not reached:
- No deposits are needed and we can go to the next houses for sale Sherwood Park or expand our search to houses for sale Edmonton and we will find you a better deal in no time!
Best & Final
At any time during a negotiation either party can give an offer that's "best & final." This means they are open to the other party to accept or decline but are not open to a counter offer.
Some people call this their "final price" or "walkaway number" so that means if the other party does not accept it, the negotiation is over as the only other option is decline.
An Accepted Agreement
One of the most important things to remember is that the seller wants to trade a house for money, and you want to trade money for a house. You have enough in common to engage in a negotiation that will result in an agreement that suits both parties. The HACK&Co Team is here to help you and ensure you have the best form to secure the best outcome. #goteamyou