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Negotiation in Real Estate

Negotiation in Real Estate

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Published by Siddhartha Kamat
NICMAR Assignment
NICMAR Assignment

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Published by: Siddhartha Kamat on Jan 25, 2013
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02/23/2015

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NATIONAL INSTITUTE OF CONSTRUCTIONMANAGEMENT AND RESEARCHMCM 518: REAL ESTATE PRINCIPLES& PRACTICES-ASSIGNMENT
 Negotiation in Real Estate
Submitted To: Dr. Mona Shah
Submitted By:
Supriya M.N.-251099 Adwait Mahajan-251100Siddhartha Kamat-251075(Batch 06)
 
Content
1.
 
Introduction2.
 
The Process of Negotiation in Real Estate3.
 
Negotiation in Real Estate from the perspective of a Buyer4.
 
Negotiation in Real Estate from the perspective of a Realtor/Seller5.
 
Five Key steps to a Successful Negotiation in Real Estate6.
 
Reference
 
1.
 
Introduction
The value of trust in a negotiation cannot be overstated. Most people are fair minded andreasonable. They respond well to respectful treatment and to having their concerns heard. If the seller feels that the buyer and agent are acting with integrity, their attitude will be muchmore cooperative. Contract negotiation is a sensitive area, and anxiety can be high. Thebuyers may have had an unpleasant past experience with buying a home. The seller may beunder pressure, with future plans at stake. Acting with integrity does not mean that all "cardshave to be put on the table." It is not proper to discuss personal issues that affect the buyer,such as your financial ability or urgency to move in. It is valuable to develop rapport becausetrust increases your leverage. Finding common ground with the seller can be a very powerfultool in the event of multiple offers.
Understanding your Leverage:
The more we find out about the seller's needs, better isthe chance we have to find solutions to negotiation hurdles. We will be able to offerinformation or concessions that appeal to the seller's deepest concerns. Obviously, if thehouse has been on the market for a long time, you have a lot more leverage than youwould with a brand new listing. If their time frame is immediate, and you can meet it, youhave some leverage. If they have multiple offers, you have very little leverage.
How much under list price should you offer?
Buyers usually offer less than list price,
unless it is a strong sellers’ market. There is no standard percentage "under list price" that
can be used. A market analysis will show recent sales for the neighbourhood, which is thebest way to establish the offer price. It is usually counter-productive to offer so low thatthe seller will automatically reject the offer. This will set a negative tone, and may resultin an emotional response from the seller.
What if we have a multiple offer situation?
Occasionally the seller receives more thanone offer on their property. By simply disclosing that there are multiple offers, the selleris not "shopping" your contract. Shopping occurs when the seller discloses the terms of anoffer to induce a buyer to submit a better offer. This can result in major distrust of theprocess by the parties, and the likelihood of loss of the buyers. Usually the procedure is tonotify each party that multiple offers have been received. Each party is then given theopportunity to raise or adjust his offer by a certain time. After that time, the seller is freeto review all offers and choose one to work with. They are not obligated to choose the"first" offer that came in. The selected offer may be countered, or accepted as is.

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