Salt Lake City Real Estate: Negotiating
When buying Salt Lake City real estate, hire a Realtor to represents you.
You have everything to gain and nothing to lose if you choose wisely.
Some agents charge a Buyers Representation fee, I don't.
A good real estate agent negotiates many transactions and uses his experience to your advantage.
Here are some examples of a few situations I've experienced and ways you might negotiate them.
Keep in mind that how you handle negotiation differs in Buyer's Markets and Seller's Markets.
The Property was Just Listed and is Overpriced:
It may be difficult to negotiate a fair deal depending on the Seller's motivation and whether it's a Buyer's or Seller's Market. If the Seller's real estate agent recommended the price, it's even tougher to negotiate because both Agent and Seller believe that the property is priced right. Have your agent ask the Seller's agent if the Seller is flexible. Write an offer at the price you want and make all the other terms on the offer strong. You may want to have your agent present it directly to the Seller and their agent, although sometimes the Seller or Seller's agent may not allow this.
Overpriced Property that has been on the market for a month or more :
This situation can be a little easier. By now, an experienced Seller's real estate agent should know the property is overpriced and the Seller might not be feeling as confident about their original price. They might be more flexible or they might do a price reduction in the near future. Make your offer and be reasonable based on what you believe the value to be.
The Property is listed at a fair price:
In a Seller's market, buy it if you like and negotiate a fair deal. In a Buyer's market you might be able to negotiate a little better deal depending on:
• How long has the property been on the market? The longer it has been on the market, the more likely the Seller is motivated to sell, usually.
• Has the Seller reduced the Price? How often and how far has the price been reduced? Has the Seller turned down any other offers? Your Salt Lake City real estate agent can find this out. Consistent price reductions indicate the Seller needs to get this home sold and is probably reasonable and would love to get an offer.
• Are there any big negatives that you don't mind? Like a busy street, obsolete floor plan, no yard, lack of curb appeal, needs work. You may be able to get a better deal and a create a little sweat equity.
• How many other similar properties are on the market? The more there are, the more likely you can get a deal, depending on the Seller's real motivation.
Property just listed below market value:
Most of the time, real estate that comes on the market priced below market value, will sell fast. This happens either intentionally (the Real Estate Agent and Seller priced it to move it quick and possibly create a bidding war) or by accident (inexperienced agent didn't understand the actual value of the real estate). Either way, if you want this house, throwing out a low-ball offer will probably allow someone more reasonable to buy it unless the market is dead. Be reasonable and act fast to hopefully avoid a bidding war, but don't count on it. If you don't have a top notch real estate agent representing you and working on this for you, you might be out of luck in a bidding war. It's not easy when more than 3 people are bidding on one property.
Real Estate Bidding War:
In a situation where more than one bid is coming in on a property, you may have to pay more than asking price to get it. First, have your Salt Lake City real estate agent figure out the home’s actual value. This is important for a couple reasons. You don't want to overpay and the property has to appraise for what you are paying in order to get a loan on it. Now if you really want it, put together a great offer from the beginning. Chances are the Seller will accept or negotiate with whoever has the best offer from the beginning although there are many ways the Seller can respond in this situation. A couple other items to consider, negotiation is more than just price, but price is a big deal.
Negotiation on Real Estate is more than just price:
That's right, price is very important, but the Seller may have other things that are important to them:
• Buyer's Financial Strength: Is the Buyer Pre-approved for the loan?
• Buyer's Terms of financing: Are the terms straightforward or is the Buyer trying to do something creative? Creative financing might create uncertainty with the Seller and their real estate agent which could weaken the offer.
• Down Payment: The more you can put down the stronger you appear to the Seller.
• Timing, how soon will you close and how quickly are contingencies lifted for inspections, appraisal and loan.
• Earnest money: The earnest money is the money that the Buyer deposits once the contract is accepted and more is better.
• Possession: How soon after the closing must the Seller be out?
• Do you have a property to Sell? If you do, is the property on the market? Is it priced to sell? Do you already have a Buyer under contract on it? When will it close? What about the other competing offers?
Other things to Consider:
• Buying real estate is probably the biggest financial purchase you'll ever make. Don't allow emotion to overcome reason and at the same time, be reasonable.
• Determine value before you bid. Also, hire a professional real estate agent to represent you. The Seller pays the commission, you might as well be represented, but watch out for dishonest, overly emotional or inexperienced real estate agents.
• Get pre-approved before you go out to look at property. There is no point of spending any time looking until you know you can afford it. Also, being pre-approved for a loan in advance of making an offer allows you to be in a stronger position.
• Low Ball Offers: Just throwing out low-ball offers usually puts the Seller on the defensive and most of the time results in a rejected offer or a firm counteroffer. For those looking for a good deal a better strategy might be too look for properties that are priced below market value to begin with or find ones that have upside potential.
• Buyer's Market vs. Seller's Market: It's important to know if it's a Buyer's Market or a Seller's Market. If every home that hits the market sells quickly, it's a Seller's market. If nothing is Selling, it's a Buyer's market. Usually it varies depending on the price range, type of property and location. This will affect your negotiation strategy.
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