Successful businesses are built through strategic negotiations. Smart investors always try to learn about practical negotiation tips and strategies to make profitable deals. Failing to negotiate effectively can leave you with heavy financial losses and even cut short your journey as an investor.
If you are looking forward to investing in a competitive rental market like Santa Rosa, here are some of the best negotiation tips and strategies to help you close the best deal possible.
Know What You Can Negotiate in Your Santa Rosa Investment
It all starts with how well you know the property you want to invest in. A detailed understanding of the place will help you determine its negotiable factors and ensure that the other party does not take you for a ride. Some negotiable factors that can make your case stronger are:
- The Price of the Santa Rosa Investment
Negotiating the actual price of the house has the biggest impact on your budget, which lasts for the long term. Hence, you must do all you can to reach a reasonable offer.
- The Closing Costs
There are many expenses over and above the asking price for the unit that you and the seller may have to bear during the sale-purchase process. These include closing costs, which typically consist of origination fees, appraisal fees, title searches, taxes, and deeds. You can negotiate who pays these costs and how they can be split between you.
- The Home Warranty Premium
Homeowners typically pay the premium of a home warranty readily as it helps them attract more prospective buyers. Hence, ask them to pay for at least the first year’s premium, which can cover the loss due to any broken appliances, furniture, or other items on the property.
- Closing Or Possession Date
As a buyer, you have the right to ask the seller for a closing date or a move-in date that is convenient for you, as the dates that the seller gives you might not always be the best, especially if you are moving massive pieces of furniture. Also, if the seller needs more time before handing over the possession, it can be a bargaining chip you can use to ask them to lower the closing price.
- Home Repairs
Sellers are usually responsible for doing the essential home repairs before selling you the property. On your part, you need to get the property inspected by a licensed property inspector and see if there are any damages like grouts, broken door knobs, cracked doors, or leaky roofs. If you detect such damages, you can ask the seller to either compensate for the renovation costs or get the repairs done before the closing.
- Appliances and Furniture
Sellers often choose to sell furnished homes if the place has furniture blocks made to fit the rooms in the unit and if shifting their own furniture is a tough task. However, if there is no furniture or appliances in the house, you can either negotiate the final price or ask the seller to place some essential items like a bed, a sofa, a fridge, and a washer. Remember, you might not be financially prepared to buy heavy furniture or appliances right after purchasing a home, so such negotiations are critical.
Gauge Your Financial Preparedness
You must know if you are financially prepared to bear the costs of purchasing a property, like the closing costs and the mortgage. Before making an offer, we suggest asking a reliable mortgage broker to estimate the monthly mortgage payment, insurance, and taxes you will have to bear right after you purchase the property.
If the seller is asking for a price that is not much greater than what you are willing to offer, you might feel like it won’t make a big difference. However, you must ask your mortgage broker to evaluate the closing costs, taxes, and mortgages you will pay for both prices. After obtaining the estimated projections, you may be surprised at how much more you may have to pay in the long run if you settle for the seller’s requested price now. This gives you a stronger reason to negotiate and stick to the price you are willing to offer.
Consider The Market Value of Your Santa Rosa Property Over the Asking Price
Sellers often set a high price for their property to make additional profits, and their asking price may not always be reasonable. Hence, we recommend you do thorough market research before making an offer. Check the prices for similar properties in the neighborhood, and ask experts like real estate agents about the price trends. Your research will give you a clear idea if a property is overpriced for its location and condition. If it has been on the market for a long time, it implies that the seller wants to sell off the property for a while, giving you strong ground to negotiate the final amount.
Know Why the Seller Is Moving Out of Santa Rosa
Avoid falling in love with a property at first sight. There could be some serious reasons why the seller is moving out. Some owners decide to sell their property due to structural flaws, accidental deaths in the home, an unsafe neighborhood, or personal reasons. If there are any structural flaws or half-done construction work, you can ask the seller to complete the work and ensure that they sell you a habitable property. Otherwise, you need to negotiate a much lower rate.
Think How You Can Get a Win-Win Deal
Negotiating should be to ensure that both parties get a fair deal. Do not make the mistake of being too passive-aggressive, getting too personal, or making an offer that would put the seller at a significant disadvantage. Think of a deal that will be beneficial for both parties.
Disclose Your Offer After They Do
When it comes to making an offer, we recommend keeping your cards close to your chest until the time is right. The seller may be making an offer that is more lucrative than your expectations. This does not apply to just the cost of the house but also the home warranty, the existing lease, or renovation costs. Hence, we suggest letting “this is how much I can offer” be one of your last statements.
Be Affirmative and Transparent
Negotiation is about persuasion, but it is also about being honest. Instead of bluntly talking numbers, we recommend you clarify your expectations and be transparent about what you can afford. This will set the right tone for your transaction. Besides, your honesty will be a solid foundation to build trust with the owner. Once they know your prospects, they may be more inclined to understand your concerns and be more flexible with their asking price offer.
Your Body and Facial Language Matter
To negotiate, you need to have much more than just factual backup. The way you walk into the room, communicate, and your attitude make a whole lot of difference. Some factors worth noting are:
- Facial Expressions
If you look annoyed, angry, or bored, the seller is most likely not going to be convinced. On the contrary, if you smile, look interested, attentive, and approachable, the seller would naturally like you and be interested in doing business with you and the chances of closing the deal can increase significantly.
- Body Language
If you enter the room like a soldier who has lost a battle, you will not make the best deal for yourself. The way you walk depicts your confidence level. Your body language should reflect your maturity, stability, and calmness. Shake hands confidently and speak audibly, keeping your voice clear and authoritative.
Emotion is the key to engaging the other parties involved in the business. Some emotions like joy, compassion, excitement, peace, or security can add value to your negotiation style. When making conversation, let your focus be on the positive emotions that you feel instead of anger, or fear, which could be scary and off-putting.
Negotiate Through a Real Estate Agent
This is one of the best negotiation tips. Real estate agents know the market price trends in and out. They know details like the seasonal market changes, the current market value, the best deal you can get, and if the property is overpriced for its location and features. They can verify if the seller is genuine and that there are no deal-breakers.
Real estate agents understand your expectations precisely and will do their best to present your investment portfolio in the best possible way. Besides, they are trained, skilled, and experienced at negotiating and getting the best deals for investors.
Don’t Hesitate to Refuse the Deal
You always have an option to say “no.” If you find any deal breakers at any point or feel pressured to give in to the seller’s price, consider if you are truly sure about the deal. If you think you are not happy with the deal, do not go ahead. Purchasing a home is a big decision, and you should do it wholeheartedly.
These were some of the best negotiation tips and strategies for purchasing a Santa Rosa property. At Redwood Residential Property Management, we aim to help every investor make an informed decision. For more useful tips on buying and managing a Santa Rosa residential unit, contact us at Redwood Residential Property Management.