Real Estate Purchase Negotiation is a Process

Michael Buuck, RealtorMichael Buuck, Realtor

As a first time buyer inexperienced with the intricacies of purchasing real estate, it is important to keep in mind that finalizing a deal is more than just signing a purchase agreement: Real estate purchase negotiation is a process. Sellers and buyers each have their own concerns and needs, and coming to a mutual deal can involve a number of back and forth steps to come to an agreement. It is important to keep the big picture—a successful purchase—in mind and not let minor conditions interfere with a deal. When making an offer to buy a property, a buyer must consider the seller’s terms when putting together an offer with their agent. The seller has already spelled out the terms they are willing to accept when listing their property for sale. With these terms in mind, the buyer’s agent has knowledge and experience to advise the buyer how to best structure an effective offer that will be taken seriously by the seller. Although offer terms are negotiable, the more a buyer’s offer deviates from the original terms stated by the seller, the less likely the offer or buyer will be given serious consideration. A seller can accept an offer as is, or make a counter offer. The buyer can either accept the seller’s counter offer or make a second counter offer back to the seller. Counter offers can go back and forth numerous times, and there is no agreement until both sides agree on terms. You should keep in mind as a buyer that each step in reaching a deal is a give and take process: One party may have to agree to the other party’s request and the other way around in order to reach an agreement. Counter offers should be fine tuning of an offer—making adjustments in one’s terms in response to the other party’s requests; radical changes by either party can stall negotiations or sink a deal. Once terms are mutually agreed upon, a purchase contract is formed. For example, a seller lists their property for sale as accepting only cash to purchase. A buyer with their agent’s knowledge/experience/advice decides that the seller might be ready to consider owner financing from a well-qualified buyer–the property has been on the market for a long time, the seller owns the property outright, the seller needs to make a deal, etc. The buyer offers especially good owner financing terms–a high interest rate, a short loan period, and his good credit rating to entice the seller to alter his terms. The seller counters that they would accept the attractive owner financing terms if the buyer pays for a tax service to monitor that the buyer continues to pay property taxes on the property during the period of seller financing. The buyer agrees to pay for the tax service. Both seller and buyer have compromised to reach an agreement–the seller has given owner financing that they did not originally want, and the buyer has given better-than-average loan terms and payment for tax monitoring service. Even after the final purchase contract is formed, there are exceptions built into a contract, such as the loan, investigation, and inspection contingencies, which protect the buyer against conditions that are not yet known at the time of finalizing the contract. A contingency is a provision for an unforeseen event or circumstance, such as not being able to finalize a loan or discovery of an issue with the property. These contingencies in the contract allow a buyer to learn more about the property for a number of days after the contract is finalized, and if an issue cannot be resolved to the satisfaction of the buyer, give the buyer a right to cancel. As a buyer, a good agent should be looking out for your best interests, but that includes guiding you to a successful purchase that can include compromise.

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