Real estate negotiation tips that pay off

Find out as much as you can about who you'll be negotiating with before you start the process. Sellers need to know if the buyers are financially qualified to close a deal. Most sellers get hung up on the price. But, the highest price doesn't always come from a buyer that can actually close the deal. For example, if the buyers make a low cash down payment and the lender's appraised value is for less than the purchase price, the lender may not give the buyers a large enough mortgage to close the sale unless the buyers come up with more cash. This can lead to further negotiations and a failed transaction. You'll also want to know how long the buyers have been looking for a home. Have they made other offers? Were any accepted? If so, why didn't they close? Did the buyers back out or was the seller unreasonable? Your agent should be able to get answers to your questions by talking with the buyers' agent. Sellers should be aware that there are buyers who repeatedly make ridiculously low offers. Often these buyers have a reputation in the local real estate community. Ask your agent to check around before wasting time. HOUSE HUNTING TIP: Buying and selling a personal residence is an emotional experience. Try to be as rational as possible in your decision-making process. Sellers should plan to counter any offer, even if it's for less than the list price if it's from a bona fide financially qualified buyer. Buyers should anticipate a negotiating process that could involve many counteroffers. Don't give up until you've exhausted all possibilities. But, don't pay more than current market value. Many buyers and sellers view negotiation as adversarial. Turn this around and look at the dialogue as a process where both parties attempt to reach a common goal -- the sale of the property. Before buyers start negotiating, they should attempt to determine if the sellers are realistic. You can waste a lot of time and emotional energy trying to make an impossible deal work. Some sellers will sell only if they get a certain price. If that price is way out of line with current market value, move on to sellers who are eager to sell. Find out the sellers' motivation level. Have they already bought another home and now have two? Are they involved in an employment-related transfer? Does the house no longer suit their needs? Perhaps, they are empty-nesters in a home that's bigger than they need. Or, is the home a surplus property due to a death or divorce? Even though you want to make a good attempt at putting a deal together, don't show all your cards at once, For example, if you're a seller and the buyers make an initial low offer, counter it, if the buyers are legit. But, leave some room in the price, which sends a message that the buyers need to come up in price to buy the home. Buyers who can pay all cash might initially make an offer that is contingent on obtaining approval for a mortgage. During the course of the negotiation, you could increase your cash position significantly or offer to pay all cash in exchange for a break on the price. Everyone needs to compromise when buying or selling. There are niches of the market where demand exceeds the supply, and multiple offers are still in vogue. In this case, you may have only one chance to let the seller know your best offer. Coming in low and negotiating to a mutually acceptable price may not be an option. THE CLOSING: Try to have your offer presented in person; make sure your agent has good communication skills and is skilled in the art of negotiation. Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author.

Best time to make a price adjustment

There was a time when a price reduction tainted a listing. That was several years ago when listings in many areas sold quickly. At that time, it was assumed that something was wrong with a listing if it needed a price reduction.

In today's market, price reductions are common. Sometimes, sellers aren't content with listing unless they try a price that's higher than what the comparable sales data indicate. Or, a price reduction could be necessary simply because it's difficult to price homes in a changing market, particularly if the local housing stock is varied in size, condition, age and style.

It's easier to establish current market value in housing developments where the homes are similar to one another, particularly if there are a number of recent comparable sales. It's hard to price right for the market in any neighborhood if few or no homes have sold recently.

It's best to list your home at a price that buyers will perceive as a good value. Overpriced listings sit on the market. Real estate agents and buyers forget about them.

The home-sale market slowed in some areas this summer. Today's buyers are cautious about buying. Some are back on the fence waiting for a clear sign that the market has hit bottom and that prices won't drop further.

Although some markets appear to have stabilized, there is no guarantee that prices won't slip. Buyers who realize that they can't time the market and who want to take advantage of low interest rates are moving ahead with their home search. They are very selective, are buying for the long term, will wait for the right home, and won't pay over market value.

HOUSE HUNTING TIP: As difficult as it may be for sellers to consider a price reduction after only a couple of weeks on the market, this is often the best strategy. Buyers and their agents focus on the new listings. If you bring your home on the market priced too high, but it's otherwise a nice house in good condition and in a good location, a price reduction early in the marketing period is likely to attract the attention of agents and buyers who still have the listing fresh in their minds.

Make sure that your agent gives your listing a renewed marketing effort to generate enthusiasm about the property. More than 85 percent of today's home buyers use the Internet to search for a home. Some sign up for services that notify buyers when a new listing is submitted to the multiple listing service (MLS) and when there is a price reduction or pending sale.

Your agent should schedule an open house for brokers as soon as possible after a price reduction to alert real estate agents who may have missed the price reduction when they ran an MLS update. MLS updates list price changes.

It's a good idea to have a Sunday open house for the public as soon as possible after the price is reduced. The open house ads for the open house should showcase the price reduction.

Depending on your local market, you may need to lower the price more than once, particularly if you waited months to make a price adjustment. If market values have moved down since you listed, you could find yourself out of sync with the market again. Don't rely on what your neighbors are asking for their homes. If they aren't selling, they are probably overpriced for the market. Rely on sales of comparable properties that closed after you put your home on the market.

THE CLOSING: Ideally, you want to reduce the price before your competition does.

Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author.