Allow Some Siggle Room

Allow some wiggle room at the table
Real estate negotiation can be a murky and mysterious thing for first time investors. After all, Americans really are not hagglers in this day and age. We are long past bartering for eggs in this big box, credit card world. The price you see is the price you pay, almost without exception. Even when we buy at discount, the percentage is always clearly marked and known before you ever bring the item to the counter.

So it can be counter intuitive to the average person to grasp that this not the case at all in real estate. Assessors can put a ballpark figure on any property after considering its state of upkeep, size, and neighborhood, but even the best expert can only produce their own best estimate. Every house in the country is different, even “cookie-cutter” suburban models. State to state, city to city, neighborhood to neighborhood, even street to street, the variables that go into what a house is worth can change drastically.

Allow Some Siggle Room
Image Source: Creative Commons Flicker Image Credit: Enid Yu

It is crucial to keep in mind at an asking price is just that; an asking price. When selling, first time investors need to remember that any house is only worth as much as someone is willing to pay for it. It’s fairly rare to actually close at what you initially ask for. Hence, it’s important to provide yourself ample wiggle room to negotiate with.

While too high an asking price will deter offers, setting the bar too low restricts how you can come down on price while still turning enough profit for the property to be worth your time and money. It may seem asinine for those of us who are accustomed to buying and selling at fixed prices, but this dance is how the market moves forward. Margins in real estate investing can be razor thin, especially when maintenance and upgrade costs are taken into consideration. Squeezing the pennies out of these margins is how the best investors really make their money.

Just remember, a truly fair compromise is one that leaves both parties vaguely unsatisfied. Maximizing your selling price doesn’t require a shark like zeal for going for the throat in every deal, and earning a reputation of reasonable and fair investor can eventually pay more dividends down the road as people learn that they can trust you. But always remember the important of that delicate wiggle room.

Chas Carrier
About the Author:

Chas Carrier is a cash home buyer and real estate expert who buys and sells homes throughout the DFW metroplex with We Buy Ugly Houses Dallas.

No comments