CENTURY21 Thomas - Real Estate Blog

How to Become a Better Real Estate Negotiator (3)

Part 3 of 3

This is the third and last article in a series of blog posts on how to improve your real estate negotiations skills. The previously two articles covered the four basic negotiator personality types and the most important steps to take for a successful negotiation process. In this final post we will present the most important real estate negotiation tactics.

It is every negotiator's dream to be able to place themselves in a position of power during negotiations and it is no different in real estate negotiations. But it would be a great mistake to try to do that through manipulation or deception. The best path toward successful negotiations is based on sincerity and trust.

Make sure that you are able to recognize a bad deal and know when it is time to walk out of it. Allow yourself an easy exit at all times but make sure you leave in good terms. This way you can still make a move later on if circumstances change.

Share information - people tend to follow reciprocity, responding in kind to how we treat them. If we want to be trusted, we must first offer it. Revealing some information, even when it’s unrelated to the negotiation, increases the outcome. Don’t have to put all of your cards on the table, of course, just put something of yourself out there like your hobbies, interesting stories, etc and set a positive tone that’s conducive to gaining agreement.

Make the first offer - this might defy conventional wisdom but it is best to extract as much as possible from the other person before tipping our own hand. We are usually reluctant to go first because we are afraid may be way off and disengage the other party, but research showed that most people make first offers that aren't aggressive enough. In real estate, a high-priced home makes us look at all the desirable qualities, while a below-market offering brings up a bad location or needed repairs.

Counter-offer but don't do it too low - people are most satisfied on both fronts if there was some back and forth. Don't take the first offer, even if it meets your needs. Go back and ask for concessions so you can ensure that you got the best deal. Many people go too low, too quickly on their counter-offer, especially if they didn't make the first offer. Let the other person know that their offer is way off by saying something like "you may be trying to test my thinking with that first offer, but here’s more of what I had in mind."

You can get closer to finalizing a successful real estate negotiation by taking small steps. Help your counterpart say yes on smaller aspects and that will help you pave the path toward the final agreement. How do you accomplish that? Adapt your strategies and tactics to each negotiation effort and make sure you ask questions that can easily generate a small "yes." But always look for the signs showing the negotiation is over. Make the close right there, don't keep going on or you risk of jeopardizing the whole effort.

If you want to read and learn more about real estate negotiations, check out these useful resources:

• How to Negotiate: 7 Real Estate Negotiation Tips
• Master The Art Of Negotiation
• 7 biggest home price negotiation blunders

How to Become a Better Real Estate Negotiator (2)

Part 2 of 3

Welcome to part two of our three-part series on how to become a better real estate negotiator. We have introduced in our previous blog post the four types of negotiators based on emotion and assertiveness: analytical, amiable, extrovert, and pragmatic. When negotiating, people usually adopt one personality type. A few trained professional negotiators display two dominant types. However, if you want to be an effective real estate negotiator you have to be able to recognize the characteristics of each type and adapt to each personality type through role play. According to Personality Style Considerations in Effective Negotiation published by the Institute for Supply Management, "the key to becoming more prepared is to understand the advantages and disadvantages of each style in the context of a given negotiation and the personality styles of the negotiators sitting across the table."

Five Steps to Successful real Estate Negotiations

Here are the steps you need to take, according to Sharon Vornholt's article called "5 Crucial Steps for Successful Real Estate Negotiations":

Be very prepared - do your homework about the area, the property characteristics, tax assessment of the property, how that home compares with other properties in the area, etc.
Listen - do not act like you know it all. It won't do you any good if the only thing you do is talking. Involve the other party in the conversation early on and you might get some useful details.
Ask "Why" and other open-ended questions - it requires some finesse but it helps you find out the motivation behind important aspects of the negotiation, like the reasons the other party is asking for a high price, what drives the objections to your arguments, etc.
Read body language - it gives you important clues that can help you navigate during negotiations. People's body can betray valuable information but you must be careful with the way you read the signs. It is better to draw conclusions based on at least two different signs since it is very easy to misinterpret a random gesture.
Build rapport - connections on an emotional and rational level can be extremely beneficial to you during negotiations. You may not be interested in all the details about their personal problems and life, but showing empathy by listening carefully helps build bridges besides maybe offering important clues.

Other negotiation experts add a few more steps to the process: present your offer, handle the objections, and close the deal. We will present more on these aspects in our next blog post. In the meantime, here are a few good resources to check out to improve your knowledge on real estate negotiations:

How to Become a Better Real Estate Negotiator (1)

Part 1 of 3

This is the first article post in a series of blog posts on how to improve your negotiations skills. Real estate negotiating is one of the most important attributes for both investors and real estate agents. The business of selling and buying properties is a people business and requires relationship development skills. As a real estate agent or even as a regular seller or buyer you need good negotiation skills. The ability to close deals favorably is crucial to the success of your real estate transaction and to the success of any business as a real estate agent.

The best way to set yourself on the right track for improving your negotiation skills is to treat it as a process toward helping you understand people and their motivation, needs and wants. Despite popular beliefs, the negotiation process is based on trust, the opposite of deception. Successful negotiations require building relationships and rapport based on honesty. Get yourself familiar with human personality characteristics and use this knowledge to structure your offer accordingly. This will heklp you negotiate from a position of power since the other side will be more inclined to agree with your offer.

First impression can be a powerful tool in your negotiation arsenal. The best way to create a best impression is to add a dose of charisma. Add to the mix some confidence and laughter, hide your nervousness and make it look like you are relaxed. All these will help you establish a good relationship and build rapport.

Negotiator Personality Types

Master the principals of human relations based on humanc personality types. You can conduct a successsful real estate negotiation if you adapt your approach to these personality characteristics.

There are four negotiator personality types:

The Analytical Negotiator - they tend to be overcautious, are very slow to decide on any course of action because they demand a high level of accuracy, and, therefore, they need lots of information before they’re comfortable with making a decision. In negotiating with the analytical negotiator you must propose solutions and outcomes that answer the question, “How has it been done before?' Analytical negotiators are usually consistent and predictable.

The Amiable Negotiator - is typically a traditionalist who is very interested in developing and maintaining relationships between the parties. The amiable negotiators hate high-pressure tactics and avoid conflict situations whenever possible. They value loyalty, sensitivity, and patience. The negative side of the amiable negotiator includes the tendency to be impulsive and sentimental.

The Extrovert Negotiator - is very friendly and open. The theme of the extrovert might be “Trust me, it’ll work out!” However, extrovert negotiators are enthusiastic, visionary, and has the ability to motivate others. They are willing to say “No” if their needs are not adequately addressed.

The Pragmatic Negotiator - is very business-like and efficiency-oriented. All thoughts are focused on the bottom line. The pragmatic negotiator can be recognized by the use of organizers and formal behavior.

Source: Institute for Supply Management - Personality Style Considerations in Effective Negotiation

In our next blog post we will present the steps of real estate negotiations and a few tactics to help you succeed.

Here are a few great online resources to check out before you start working toward improving your negotiations skills:

Real Estate Negotiating (Part 1) - FortuneBuilders
http://www.fortunebuilders.com

Real Estate Negotiating (Part 2): The 8 Step Process - FortuneBuilders
http://www.fortunebuilders.com

Staging - A Clean Garage Can Help You Sell The Home

Curb appeal is the key word for staging a home for sale. Make the front of the home so appealing that potential buyers can't wait to see the inside. This is probably the most common (sense) advice sellers get from real estate agents. Then you need to follow up with carefully decluttering the interior and remove as much personalization as possible.

Everything in life comes at a price and thing are no different in real estate. One part of the house will probably pay the price so the rest of it looks nice and clean: the garage. Boxes will pile up to the ceiling, covering every corner and making the place look like the perfect candidate for a Discovery Channel episode of "Hoarders." No wonder 86 percent of buyers, according to this article published on realestate(dot)com place "a garage with storage" on the list of desirable or essential features they look for in the hose they want to buy.

Why would you treat the garage differently than any other important aspect of your home now that you know it plays such an important part in catching buyers' attention and interest? Take a look at that neat, impeccable garage of your neighbor and learn the tricks. Take a deep breath, relax, and get to work. You can't do much with all that stuff piled up there so start by emptying the room. Move everything out and prep the space for a thorough cleaning.

Start with pressure washing the walls then get rid of any remaining stains. Follow this guide on how to pressure wash a garage. Paint the walls with semi-gloss paint (don't get too bold with the color, though!) and coat the floor with epoxy. Here is a step-by-step guide on how to epoxy-coat your garage. Then organize the place to make it look tidy and clean. Make sure you do a good job by following these 6 garage-organizing tips.

Now is probably the best time to sort through all the items, discard what’s broken and sell or give away anything that you’re not using. Make sure you group like items together. Attach shelves or cabinets to your garage walls or put up freestanding units and store the heaviest items on the lowest shelves. Hang rakes, brooms, shovels and other flat items on the walls while bikes need to rest on hooks from the ceiling. Here is a diy video for garage clutter control:

Remember, the most important thing you can do to prepare your home for sale is to get rid of clutter. Pay attention to curb appeal but don't ruin the buyer's good impression by neglecting the garage.

Steps in Selling the Old Home and Buying Another

Tips on How to Sell a Home Before Buying Another

The real estate market has changed dramatically in many parts of the country from a couple of years ago. There are now fewer homes for sale than they used to be and many people might find themselves in an interesting in-between stage: finding a home to buy before they sell the one they live in. Ideally, you would switch from one mortgage to another the same day, buying the new home at the same time you sell the old one.

We don't live in a perfect world so most people need to secure financing for the new home before they are able to sell. Nobody likes to be homeless, even for a short period of time. If you sell your home first, before you bought the new one, that's exactly what you are. Now of course, the meaning of the word is not precisely the same as for the people hit by poverty and misfortune. Yet, besides the advantage of getting the cash you need to buy the new home, you need to find a way to cope with the squeeze time, from the moment you leave the old home to the one you buy and move in the new one.

Switching from one home to another is by no means a trivial step so you have to carefully consider many important aspects and ask yourself a series of important questions:

How long it will take to sell?
Is it possible to sell and buy at the same time?
Can you make a sale-lease back arrangement?
Can you afford to buy before you sell?

You can find good answers to all the questions in this recent article.

Don't panic if you were able to find the perfect next home while your old house is still on the market. Here are a few options for the squeeze time if you first sell the old house:

Rent back the house from the buyers, provided that you cover their costs for the time you rent back: the new mortgage, property taxes, utilities and homeowners insurance. The best way to secure this option is to include a provision in the sales contract allowing you to rent back for a certain amount of time;
Move in with parents, a sibling or a friend. You may need this option if it takes more than a month to find the new home. While this option buys you time, you need to consider the costs of moving your stuff twice;

Depending on the conditions of your local market, you may find the new home to buy before you sell the old one. Even though lenders have a standard 40% ratio between income and mortgage, they might loosen up a little and allow a 50% to 55% debt-to-income ratio for someone temporarily straddling two mortgages. Here are some options in this case, presented in more details in an article published on MSN Real Estate:

Tap your home equity;
Consider a bridge loan or wrap financing;
Borrow from relatives or from your 401(k).

We do not advice tapping into your 401(k) but use a contingent contract for selling buyer's home, meaning the buyer's home must sell before the buyer is obligated to complete the purchase transaction. But remember: your ability to bargain on a new home is greatly diminished by the conditions that you build into the offer. Many people do not entertain offers with strings attached and if you are putting a bid on a foreclosure, it won't be considered if you have a contingency on selling your home. Considering today's market, many real estate agents believe that the sale of the present house trumps the purchase of the new one in order of importance.

5 Best Practice Rules For Homebuying

2003 was the year of flashy positive news about real estate: limited supply on the market, bidding wars, multiple offers, the whole nine yards. Mass media, social media, print media, you name it, was fast to point out the signs or recovery and low interest rates. It all seemed like the beginning of a promising race, with the market moving fast toward an encouraging end.

The only problem with that, as pointed out in this article recently published on AOL's real estate section, is that we tend to forget we are just at the beginning of a race. Moreover, it doesn't seem to be a simple race but a full-fledged marathon. If you plan on buying a home in 2014, you should raise above the trees and try to see the entire forest. Don't make decisions based on micro stats, short term events, or flashy article titles.

The above-mentioned article provides 5 important best practices for home buying, helping people focusing on long term goals. Read the article to learn how to:

Educate yourself on aspects related to financial self assessment while focusing on your needs and capabilities instead of market characteristics. This will help you define the best time for you to buy, a decision evolving more around you and not necessarily dictated by the market;
Define your priorities: your home is a place to live first and a financial investment second. Do not rush the process, as home buying is a complex affair, a mixture of rational, emotional, and financial decisions;
Forecasts, prognosis, and predictions may not be very accurate. Don't let yourself fooled by data posted in print or online. Make decisions after careful assessment of numbers and stats, always following your established set of priorities;
Take into consideration only local aspects. The realities in your community trump any trends on a national or state level.
Trust yourself. Any decision you make should be based on your own assessment and knowledge of your financial capabilities.

Buying a home is more like a marathon than a fast-paced race. Move along this complex process with the speed that makes you comfortable on assessing your real financial strength, needs, and long term plan for you and your family.

Read the entire article here...

Housing Market to Improve in 2014 as Mortgage Availability Concerns Ease

More people plan to buy a home, recent economic outlook shows. The good news, according to an article published recently on Inman News, is that nationwide 6.9 % more people were looking into buying in December, up from 5% in November. The not-so-good news is that existing-home sales have not seen much of a rebound lately, with pending home sales only stabilizing in November.

Yes, there still are concerns about mortgage availability, but people have improved their perception and attitude about the ease of getting a mortgage. This comes as a natural reaction to the fact that loan officers have eased lending standards for residential mortgages, compensating the negative impact of the current higher interest rates.

To continue the series of good news, economists predict that the housing market's contribution to the economic growth this year will double. According to the article on Inman News, the GDP growth will reach 2.9% in 2014, but we have to wait and see. Economists made some other projections in the past that were not confirmed in reality. Fannie Mae expects that 0.6% of the GDP growth to come from the housing market. The signals we get from home builders are extremely positive so we hope it will be even more.

Now that the foreclosures and distressed properties are fading out, competing less with the other residential properties on the market, we may experience a double-digit growth for the new-home sales and housing starts. According to the article, first-time home buyers and trade-up buyers need to step up and make for the decline in transactions made by investors if we want to see improvements in purchase mortgage applications.