How to Successfully Negotiate Real Estate for Clients
Let us be honest with ourselves, the booming housing marketing of the COVID-19 pandemic and early post pandemic has come and gone. If you are unfamiliar of the conditions of the market at that time, below is a brief overview.
2021:perfect conditions for supply of continual listings and demand of eager buyers supplemented with the lowest interest rates history has ever seen (January 2021: 2.65%).
2022: market shifts to seller paced with supply dropping drastically and listings creating interest of buyer’s competition alone.
2023: demand of buyers has dopped and we are seeing homes with a higher current days on market (CDOM) (May 2022: 30 days March 2023: 54 days)
Whether you are a seasoned realtor or newly licensed, one of the most essential skills you can possess is the art of negotiation. Being able to successfully negotiate a home price reduction after the initial listing can be crucial in this market, benefitting all parties involved. In this guide, we will walk you through indispensable steps that you can use in your next negotiation of home price reduction.
Understanding Seller’s Motivation
This may seem simple but understanding your seller’s motives and priorities is one of the most important aspects in being able to negotiate effectively. Are they looking to sell quickly? Are they willing to be patient for a higher offer? Why are they wanting to sell their home? These are questions you need to ask your client to understand their goals and how to tailor your negotiation strategy to fit their needs. These should be asked before you ever list the home but may be beneficial to reaffirm prior to reducing the price.
Setting Realistic Expectations
Communicate with your seller about current market conditions and what they can expect. Be open when discussing potential benefits of a price reduction. Being honest and transparent with these expectations build strong client relations in areas of trust, care, and credibility. These expectations should be addressed before list, during, and after.
Market Research and Analysis
Before listing or initiating any negotiations, it is important to conduct in-depth market research. This includes searching comparable properties in the area, assessing market conditions, and identifying familiarities that may be affecting local property values. This information will serve as the foundation on which you will approach your negotiation strategy.
Highlighting Property Value
Showcase your listing. Gather a list of benefits the property brings to the area, benefits the area brings to the property, and anything else that will emphasize selling points. This can be recent renovations, desirable features, distance to local amenities, and other characteristics that make the property stand out in the market.
Present Data That Speaks
You are negotiating a price reduction. You need to be able to provide reasoning and facts as to why and how it makes sense to reduce the price. Numbers do not lie. Providing comprehensive market analyzes, recent sales figures, and any information that is relevant will help support your case for a price reduction and how it will benefit the seller.
Offer Incentives to Buyers
In negotiating and selling your listing, creating a competitive advantage is essential to gaining interest and catching the eyes of buyers. To do this, you can do a few things to sweeten the deal. You can offer to cover closing costs, including certain appliances, flexible closing timeline, or anything else that will spark attention.
Communicate Effectively
Being able to communicate to your clients with a sense of clarity and purpose is essential in negotiations. Clearly stating your points, actively listening to buyers’ thoughts and concerns, maintaining professionalism while keeping the conversation going in the right direction will help the entire process of listing, negotiating, and closing the sale.
Negotiating a home price reduction requires a combination of effective communication, market knowledge, and strategic thinking. By including these strategies in in your selling process, you can increase the likelihood that you will bring the best possible deal to your seller in an incredibly competitive real estate market. Happy negotiating!
Meet Cam!
Cameron has been licensed in Kentucky since 2021 with his family team, Team Barrett at HUFF Realty, where they deal with residential sales. Cameron and his team have been in the Top 15 of their brokerage for 2021 and 2022. Team Barrett was awarded Chairman’s Club Status for having 70+ total closed units in 2022 as well.
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