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Buyers Must Strategize in Today's Sellers' Market
"How can you negotiate the best deals as a buyer in a sellers' market?" a real estate investor asked me.
"It's not easy," I replied. "But using certain negotiation strategies will increase your ability to get the best possible deal."
Of course, the structural challenge is significant. A sellers' market means there are more buyers and demand than sellers and supply.
As a result, sellers have a greater likelihood of getting several potential buyers bidding against each other. This puts sellers in a powerful leveraged position and their potential buyers in a relatively weak one.
So what can buyers do?
1. Find potential deals before they hit the open market.
If you hear an owner may want to sell, immediately contact them.
You might even contact a property's owner even if you don't hear anything. After all, market values often rise quickly in sellers' markets and some owners may decide to turn a nice profit if presented with a quick and easy opportunity to do so.
Of course, still critically analyze every potential opportunity. You must keep your finger on the pulse of the market and do your homework on every deal. With market values constantly changing, the key to your best deals still will be dependent on a comprehensive financial and market analysis of the property's potential and the risk involved.
2. Creatively explore the seller's interests.
A colleague's spouse recently helped a couple purchase a home in central Phoenix despite this couple's offer being lower than two competing offers.
How? My colleague's spouse insisted on a personal meeting with the seller and found out the seller strongly preferred a buyer who would take care of the house in the same manner she did, and had an interest in an early close with no financial contingencies.
In short, the seller valued a strong, personal connection with the house and a short, certain close as more important than price. Both parties ended up with a great deal.
My advice? Find out what nonprice issues the sellers value. Then fully satisfy them in your offer.
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Copyright © 2004, Marty Latz
Copyright © 2004, The Negotiator Magazine