Determining the value of a property

The best way to determine property values is to monitor the sale of similar properties in the same geographical area. This way you can track how much a home is listing for, how quickly the home sells, and at what price. Your real estate agent can usually provide information like this to you and save you some time. This is your money on the line and it is important that you educate yourself as much as possible.

The seller will have an asking price on his house. You, the buyer will have an offering price. The negotiated end result will be the final purchase price of the property. What the seller may have paid for the house originally, and how much they would like to get doesn’t matter. If the seller is sticking to some unrealistic image of the value of his property, you should just move on. The price a buyer will pay and seller will accept for his house if neither party is under duress is known as the "fair market value". Duress can come from different sources. If the seller’s are going through a divorce and are selling because they are required to by divorce decree, they may be under duress. If an appraiser knows that a sale was made under duress they may adjust the appraised value to conform more to other sales in the area.

The Art of Negotiation

Many people are uncomfortable with negotiation. In this country we will readily pay the market price for an item even if it means paying too much.

Because no one just pays the sticker price for a home, buyers need to become a little more knowledgeable about the negotiation process.

Buying and selling a home can be an emotional experience. Sellers often have emotional ties to a home. Add to that the necessity of negotiating a price for something that holds so many memories and it can put you on an emotional roller coaster. A buyer on the other hand is dealing with large quantities of their own money. They may already feel insecure about making the decision not only to put an offer in on a particular house, but also possibly even to buy a home in general. There are many reasons why emotions might enter into what should be a detached business transaction.

Since it is impossible to completely eliminate all emotions involved in the transaction, you must try to at least control them. The person who controls their emotions the best usually ends up with the best deal.

A good negotiator applies a few basic principles to the negotiation. They can increase your odds of a negotiation working out to your advantage.

Be Realistic

Get your facts first. Have comparable recent house sales supplied to you from your Realtor. With these facts you can obtain a fair assessment of a reasonable offer to make on a house. Don’t just pull a figure out of thin air.

If you have been prequalified or preapproved for a mortgage loan this fact needs to be stressed when your offer is made.

Don’t ask for unreasonable corrections before you have had a chance to review inspection reports. Allow the reports to offer you the factual information. At the time you review the reports you can use property inspection clauses to renegotiate certain areas of your contract.

If the sellers agree with your initial offer, they will sign it. At that point you have a ratified offer. The contract should still contain certain contingencies. It is these contingencies that give the buyer an out. Two very common contingencies are for financing and property inspections.

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