Real estate is a great example of a purchase we make in our life that makes us emotional. At one time or another, you will get caught up in the moment of a purchase and you will make “emotional” decisions instead of “strategic” decisions. I want to help you understand a few ways to overcome the tendency of getting emotional over your new home or condo. Before we get there, lets go through the steps you need to take before you get to the negotiations:
1. Get Pre-Approved.
Getting pre-approved by a lender should be the first step on your way to home ownership. It is quick, easy and FREE. Until you are pre-approved, you may be looking at homes that you simply can’t afford.
2. Pick a GREAT agent/broker to help you identify your goals and needs for a new home.
This is obviously a pretty big piece to your new purchase puzzle. You don’t want to just choose anyone. Interview them. Write down your goals and desires for a purchase and ask your prospective agent; “Do you have the experience to help us find this kind of property?”. “Are you willing to negotiate for us as if it was your own purchase?” “If we respect your time, are you willing to take the time to help us choose the best home for us?”.
Getting off on the right foot with a qualified, experienced and intelligent agent is the first step in the process. Think of them as an advisor. This is an important decision; you need someone in your corner, acting with your best interests. Pick an expert in the area that you would like to purchase. Don’t settle for a friend, family or acquaintance. Interview first, hire second.
3. Treat a purchase like a report
Does everyone remember book reports in grade school? I do. Here were the steps then that led to success then and how they relate to your purchase now:
-research (Pick three neighborhoods and stick to them. Get to know them, and make it a priority to understand the ins and outs of where you may call home. Having three neighborhoods identified early, will force you to stay focused. It can be easy to look all over the city, but if you do, you will get distracted, you’ll get frustrated and the number of homes/units to look at will seem endless!)
-an outline (Write down the contents of your new home. What does it look like? What floor? What type of amenities do you need? Do you want the unit closest to the grocery store, or with a better commute to work?)
-a draft (This is where your hard-work will lead to success. Take the time to sift through the junk. Everyone has their own way of researching homes Craigslist, Google, Windermere, John L. Scott, Coldwell Banker, Redfin etc…. It doesn’t matter what site you use; just pick a horse, sift through the homes you don’t like so it will reveal the homes you do like!
-The final product (now that you have the neighborhoods of choice and the homes/units identified, you need to build confidence in your decision).
4. What does your gut tell you?
This may be an old saying and one that doesn’t help the analytical type, but I’m telling you that you need to trust your instinct first. If the place feels like an investment that you would enjoy, be happy with and something that you would be proud to show your friends and family; it probably is. Let your “gut” help you make that decision.
5. I’ve found the “place”! Now what?
This is where you start to build your strategy. You need to remove the emotion and the feeling that you can’t live without it. You need to quickly identify two other units or homes to help you negotiate. Ask your agent to build a negotiation strategy, based on those units as well. What I mean by that is when I represent a buyer I typically like to show the sellers they are on a list of “3”.
Here’s an example: “Mr and Mrs. Seller, we have identified your home as one that we may purchase. It is on a list of our three favorites. Once we go through the pros and cons and we make our decision, we will let you know”.
At this point, the sellers know that there is competition. By doing so, you “create” emotion that the seller has to deal with. They may ask themselves, “if we don’t take this offer, they will probably take one of the others, right?” or “I think we should just give them what they want. We don’t need to be on the market any longer…..do we?”.
The other side to this method is that it is often a much better experience for you as a buyer to give yourself another option in case your first options falls through. This helps remove emotion; thus forcing you to make better “strategic” decisions which ultimately lead to getting a better deal.
6. Make your offer sing!
The biggest part of getting an offer accepted is how it is written and presented. It needs to be clean. If your agent knows their stuff, they will add very little. The offer needs to be simple, straight and to the point. You need to do your homework so that you may touch on items that may be important to the seller. For instance:
Are they moving? Are they on a tight timeline? Would it help to give them a “quick close” so they can get on with their life and get to where they need to be “on time”. If that is the case, you can structure your offer to give, so that you may receive. A quicker close for a seller, could mean an additional $5,000 dollars off the purchase price for you. Bottom line is; find the opportunities to leverage and use them to your advantage.
7. Stand firm, but use deadlines to your advantage!
Now that you have submitted your offer. Stand firm. Don’t expect to always get an answer over-night. Getting everyone on the same page can take time. Use the deadlines in the contract to your advantage. For example:
“We’d like to have a response by tomorrow at 5pm. We are still waiting on a response from our other offer as well. We do like your home the best, but if it gets down to it. We may move in another direction if we don’t hear from you in a timely manner”
Time-lines create more decisive action from a seller.
8. Enjoy your new pad
Buying real estate is living the American dream. Enjoy it. Its not only a place to rest your head or to enjoy your friends and family; its the best investment you can make for your future. Home ownership will ultimately be your best investment. Treat it that way. I think if you follow the steps I’ve laid out for you, it will put you a step ahead. When you do finally own your first home; enjoy it, you deserve it.
As always, feel free to send me any questions, comments or feedback to email@example.com.