It's Important to Negotiate
The seller might accept your very first offer, but a more common scenario has the contract going back and forth between buyer and seller until everyone agrees on every term within it. Some people are born negotiators, but for most of us it's a learned skill. If you're buying or selling through a real-estate agent, the agent will handle most (if not all) of the negotiations for you, but you'll have to learn to express your wants and needs to the agent to make sure you end up with a favorable contract.
If you're dealing directly with a buyer or seller, hold off on discussing price, because that topic sends everyone into a defensive mode. Starting out with a period of friendly conversation is usually a better way to get answers regarding the other party's motivations — just be careful not to give away too many details about your own!
Decide which issues are most important to you before you begin negotiations. That way, you'll already have a clear idea about those issues where you might be willing to be a little more flexible.
No matter who you are dealing with, ask as many questions as it takes to get the answers you need. Learn to ask open-ended questions — questions that cannot be answered with a simple
If you are a buyer, ask the seller to respond to questions in writing, because those records could be important later if problems are found. Sellers are usually honest when asked questions about their properties, but it doesn't hurt to be cautious.
Negotiations typically go back and forth until each party is satisfied with the contract, but there will be times when you won't be able to reach an agreement. Even those negotiations are worthwhile because they are an important learning experience. They will help you with the next contract you attempt to resolve.
Your Good-Faith Deposit
The deposit you submit with an offer is referred to as earnest money, or a good-faith deposit. It is credited back to you at the closing and should always be refunded to you if your contract contingencies are not met. You are not required to submit earnest money with an offer, but sellers regard the funds as a sign of your seriousness and your ability to close on the property.
Your attorney or real-estate agent can tell what percentage of the sales price is considered an average good-faith deposit in your area. If you go with a lower amount, consider showing the seller documents that prove you can close on the property, such as a preapproval letter from your lender.
A hefty earnest money deposit can sometimes offset a low offer, especially when combined with a quick closing date. Always try to put some type of a positive spin on a low offer.
Very low good-faith deposits usually trigger a request from the seller for more funds. When that happens, the amount the seller requests is often considerably more than she would have accepted if the buyer had been more realistic with the initial offering. Try not to wave a red flag at the seller that you don't have the funds to complete the transaction.
