How to Deal With Offers and Negotiations: Tips for a Real Estate Buyer

Any savvy real estate buyer knows that finding your dream property involves more than just browsing listings and attending open houses. It's all about the art of negotiation, where the true essence of the home-buying journey shines through.

This article will explore the critical ins and outs of handling offers and negotiations, equipping you with the knowledge and strategies needed to secure the best possible deal. Whether you're a first-time buyer about to make your first offer or a seasoned investor looking to refine your negotiation skills, the principles of effective negotiation are timeless. They can truly make a difference in your real estate transactions.

• The Market Knows All
• You Don’t Have To Do It Alone
• The Psychology of Real Estate Negotiations
• Overcoming Challenges in Real Estate Negotiations

The Market Knows All

It is often said that knowledge is power, and while Game of Thrones fans and pop culture references always find a way to subvert that saying, nothing could be truer. He who comes to a negotiation with all the right market knowledge is the most powerful in that situation. Why?

For one thing, the seller can’t overstate the value of the property in question. For instance, premium property in The Bo Viera project in Turkey sells for between USD 990,000 and USD 5,500,000. With this price knowledge, no seller could get you to pay more than the average price in that same region.

Knowledge also saves you from making bad decisions, like a purchase in an area that won’t get you a great ROI — leaving you saddled with a property that doesn’t fit your plans, whatever they may be.

So, before getting into any negotiations, arm yourself with all the data you can find: market trends, sales data, and the supply/ demand numbers (this especially can help you figure out how much leverage you have to negotiate for lower prices or favourable terms).

You Don’t Have To Do It Alone

Yes, it’s okay to work with a real estate agent. It’s a great strategy for negotiating a satisfactory deal, especially if they are skilled professionals. An experienced agent brings valuable insights and expertise to the table, benefiting buyers in several ways:

1. A skilled agent can provide detailed market analysis, including information on supply and demand in the local real estate market.
2. An agent's market knowledge can guide you in determining a fair and competitive offer price. They can assess the property's value based on its condition, location, and comparable sales, helping you craft an initial offer that aligns with market realities.
3. Their expertise allows them to navigate tricky situations, handle counteroffers, and guide the negotiation process, reducing your stress and increasing the likelihood of achieving a successful outcome.

You know what they say about two heads being better than one – you are more likely to come to a great deal/ decision working with an agent than you would working alone.

The Psychology of Real Estate Negotiations

With or without help, you need to get into the psychology of negotiating a real estate deal. Emotions play a big part in how a deal gets closed if it gets closed at all, and all other factors in between. And if you’ve gotten that on lock, the world is literally your oyster.

The first step is realising that negotiating in real estate is not all that different from regular negotiations. You are essentially meeting with someone to make a decision that would benefit both parties, whether buying/ selling a house, negotiating a salary, or being a parent. And in truth, as human beings, we are in a constant state of negotiation.

Listening

Figuring that out is easy enough, but where the cookie gets tougher is that psychology in real estate negotiations is all based on getting to know the person you’re dealing with, aka the seller. Who are they? What motivates them? Especially within the context of this sale?

Now, obviously, it’s never as deep as becoming the FBI or CIA with your seller, but you do need to learn what makes your seller tick. You may ask, “How’s that possible?”, considering most buyers just meet the seller during a viewing. The trick? Listening with the intent to understand.

Many people would argue that they do indeed listen, but there’s a huge gap between listening to understand what has been said (or how it was said), and listening to give a reply. The latter is great and all, but it doesn’t give you the opportunity to pick out the words and find out what’s going on in the mind of your seller.

But it’s not just the words you have to look out for; a lot can be said in a seller’s silence as well. Silence is a very uncomfortable concept for a lot of people, and many would go out of their way to fill a pause in the conversation with banter, a joke, or oversharing. It’s great to be conversational with your seller, but it takes away the opportunity to watch them closely.  Interestingly, if you get more comfortable with silence and wait patiently, you may unlock a rare chance of getting the other person to share their thoughts.

Engaging intently and giving the seller the reins of the conversation makes them feel in charge and can move the discussion in your favour. They will feel listened to, and that could draw you both closer– and what’s better in negotiating a deal than doing so with someone who considers you a friend?

What’s more, you need to understand that the seller may be just as uncomfortable with the silence as you are and will thus try their best to fill in that quiet — with all of their thoughts. Some of these thoughts into words typically include:

• What they need to make the deal satisfactory for them
• Their goals (are they selling to reinvest, selling because they’re moving, or is it a distress sale)
• What is happening around them at the moment. This is great to look out for as it could help you get a lower price or some concessions. For instance, say you discover the seller is going through a divorce and needs to sell the property quickly to finalise their settlement. Understanding this life situation, you can present an offer with a shorter closing timeline, providing a mutually beneficial solution that meets their urgent needs while securing a favourable deal for yourself.

Listening gives you the answers to these questions, and as an attentive listener, it’s much easier to establish a win-win outcome for everyone involved.

Dealing with Rejection

Getting a no has got to be one of the worst responses you could hear in a negotiation process. It downright means all of your proposed offers, compromises, and everything in between aren’t good enough to be considered.

The emotions that fly around after hearing such a response must be mastered. A given rule in real estate is that a ‘No’ doesn’t always mean ‘No.’ What it, in fact, means is

1. If it’s an immediate refusal on your first offer, then you haven’t created a sense of win-win for you and the buyer. The worst follow-up would be to throw everything in to get a positive reaction or walk away after that try. Instead, it’s okay to step back and systematically improve the offer until you hit your limit on what you can give. In a nutshell, control your emotions and take it slow and steady.
2. If the rebuttal comes after the first offer and several improved re-offers, then there is no crime in walking away. As great as a piece of property may look, it should never be a do-or-die affair to get it, especially if you’re going out of your plan to make it happen. It’s just a sign that this deal wasn’t meant to be, and you should search elsewhere.

This part of psychology with property negotiation is closely related to two other elements: compromise and adaptability.

As a buyer looking to leverage emotions in deals, you should know how to make concessions for the deal to work. As mentioned earlier, though, it should never come at the cost of your plans or happiness in the deal. The same goes for adaptability — you should be able to bend to the seller’s suggestions and terms so long as they aren’t detrimental.

There are two other elements you need to boost your chances. Confidence and speaking in affirmative language can go a long way in giving you the upper hand in negotiations. You want the seller to see you as someone direct, sure of their words and actions — this builds trust and rapport in your interactions.

For affirmative language, avoid negative statements as much as possible. “Not” isn’t something you should throw around lightly because it can give the seller the impression that you aren’t pleased with the showing (a poor reflection on them, and people tend to be defensive if they think they are being perceived poorly). Instead, focus more on talking about the positives, and if there are indeed negatives, you can talk about them in a manner that isn’t condescending.

Overcoming Challenges in Real Estate Negotiations

Every buyer dreams that negotiations end positively and everyone gets what they want. You could try all of the tips and strategies and still hit some major bumps on the road. You shouldn’t take it at heart; instead, what matters is how you handle it.

Here are a few tips to overcome two of the most common challenges you may experience in negotiations:

• The most likely challenge you’ll face with property negotiations is with counteroffers. You shouldn’t be discouraged, though, as they’re as standard as they come. Remember the conversation about being flexible and adapting? It’ll come in handy here. The best strategy is to carefully consider the counteroffer, look at your other options, and determine if it's worth it for this property in question. Never be in a rush, and hold research close to you – the more knowledgeable you are, the better equipped you are to decide.

• While a common buyer dream is a successful deal with no hassle, one countering nightmare is the typical seller from hell. The seller with a very curt or crude approach and a certain amount of nonchalance is a difficulty no one likes to deal with. Unfortunately, they’ve got a really great piece of real estate that you’d like to have on their hands, and there’s no way around it. The only solution is a bucketload of patience. Effective communication with a cool and calm demeanour, as well as ensuring that you are only concerned about solving problems related to the deal, is always a great way to go. 

And if all of that doesn’t work, you’d be proud you employed professionalism.

There may be other instances that pose challenges during the negotiation process, some of them straight-up frustrating, but the approach remains the same: keep calm, exercise patience, listen, and maintain a solution-based mindset.

In a Nutshell

Whether you're seeking a place to call your own or an investment that stands the test of time, the journey to property purchase starts with effective negotiation.

Understanding the nuances of timing, delving into the psychology of negotiations, and embracing strategies can be your keys to unlocking the door to success in real estate. When you master the art of negotiation, you not only secure the best deals but also create a win-win scenario for all.

Challenges will arise, counteroffers will be made, and sometimes, you may encounter situations that test your very core, but it's how you handle these obstacles that define your success. Keep your cool, stay patient, and maintain a solution-focused mindset. With professionalism and a calm demeanour, you can overcome even the toughest negotiation hurdles.

As you step into the world of real estate negotiations, armed with the knowledge and strategies discussed here, may your offers be accepted, your negotiations be successful, and your real estate dreams become reality. Happy negotiating!

Cover photo: PNW Production (Pexels)