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At time of writing (October 2022), the real estate market in Wisconsin is in a bit of a transition phase. Interest rates, economic uncertainty, and political cycles, all paired with the annual slow down associated with shorter days, colder weather, and the impending holidays are pouring water on the fiery market we experienced through the first three quarters this year. Buyers always want the best possible deal, but we see more opportunities to negotiate with sellers on price than we have in quite a while. Despite all this, you’ll need to put in the work, have the right mindset, and find a great Realtor to partner with to take advantage of this shifting market. Here is a list of ideas that will help maximize your chances for success! Feel free to skip to the section you’re interested in:
Negotiate with facts, data, and respect
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Know your market
Even before you hit the streets and start looking at properties in person, work with your Realtor to look at properties that have sold over the last few months in the areas that you’re searching in. Be sure to look at homes a little above and a little below your projected budget, so you understand what kind of value you can expect for your desired purchase range.
Of course you’ll be looking at purchase prices, but don’t stop there. How long did it take for the listings to sell? How many listings are currently active? When inventory is low, sellers are less flexible, knowing that buyers have limited options. When competing with a lot of other listings in the area, however, sellers will start to re-adjust their expectations and entertain lower offers if they can afford to.
Always remember that the market information you’re looking at today reflects what was happening two to three months ago. Properties that closed in September often accepted offers in July or early August, and may have even been originally listed in June! In a shifting market, it’s important to take this into account. Know the trends so you can put all this data into context.
Be ready to buy
This seems like a no-brainer, but it is surprising how many people start looking for houses before really understanding their financial realities. Make the big decisions ahead of time so you can write an offer with clarity and confidence.
Planning to borrow money? Get pre-approved with a great lender that you trust. Not only does this show the seller that you’re ready and able to pay, but it also gives you a defined budget, so you focus your search on properties you can comfortably afford.
Paying cash? Have proof of your funds available (or better yet, get this in your Realtor’s hands asap). Writing a cash offer with good proof of funds is a powerful motivator for some sellers who want to see financial certainty in your offer.
Start looking early
Once you understand your budget, get out there and start looking. Perhaps you have a strict timeline in mind for moving. It’s still better to get out there reasonably early. Waiting until you’re close to your target date only puts on the pressure to find something quickly, which becomes a strategic liability. If you get too close to your “must move” date, you may need to settle on a house that doesn’t offer everything you’re looking for, or to pay too much for a home, just to avoid being homeless. Starting your search early will also teach you more about the market and help you become a better negotiator. Seeing properties in person will give you a better perspective from which to compare and contrast various listings and to understand their real market value!
Be patient
If you took the last point to heart, you can afford to be patient. Settling on a home, neighborhood, or price that you’re not thrilled with does you no good when you have the time and flexibility to wait for something better! Be sure you work with a Realtor who shares your attitude and is willing to help you find the right property AND the right situation to meet your needs! In real estate, we often hear people say “everything happens for a reason.” Usually people say this when a deal falls apart, or the seller accepts someone else’s offer. The same sentiment can also apply to passing on a situation that doesn’t quite fit your plan. Letting go of one opportunity usually opens the door to the next one.
Keep an open mind
Emotions are a big part of the home buying experience. We all want to “fall in love” with our next house before even thinking about writing an offer. After all, it’s a huge decision and a huge investment! It’s important to be careful, however, not to let our emotions get in the way of good solid decision making. Keeping an open mind will help us to avoid being taken advantage of by aggressive sellers. It also may help us find a property that fits our needs, even if it doesn’t match our original vision.
There are plenty of times a buyer has insisted to us that they needed a 4 bedroom home when in reality they needed 2 bedrooms and room for two offices. Keeping an open mind meant being willing to consider properties with a den, or some space in the basement that could be converted to office space. Being open-minded gives you more options. When negotiating, whoever has the most options generally has the advantage.
Negotiate with facts, data, and respect
When presented with an offer below their asking price, most buyers have a hard time controlling their negative emotions. It’s easy to see why real estate transactions can become so contentious at times. If the two sides have differing opinions of the home’s value, one party will always feel they are getting the short end of the stick.
A low offer should always be accompanied by facts and data supporting the offered price. For example: “Since the house across the street sold for $10,000 less than your asking price, and it was bigger with a remodeled kitchen, we feel a fair price for the house is $X.” Simply submitting a low offer without any explanation will leave the seller thinking you’re simply fishing for a good deal. Providing feedback, evidence, and data show that you’ve thoughtfully considered the facts and are negotiating in good faith.
Be careful to show enthusiasm for the property and respect for the seller and listing agent. Aggressive language listing the property’s defects, or questioning why a property is overpriced will create an adversarial relationship from the beginning, and could end your chances of coming to an agreement. Remember that the listing agent, while they work for the seller, is your final spokesperson, communicating on your behalf directly to the seller. Building rapport through respect and thorough preparation can help bring the listing agent to your side, increasing their probability of advocating for your position, which can make all the difference.
Summary
The common theme of all these hints is this: Keep your options open, operate from strength, and wait for the right situation. Knowledge is power, and understanding the local market will help you evaluate a property’s true value. Remember, the goal isn’t to pay under the asking price. The goal is to pay a fair price based upon value. In a shifting market, if you don’t do your research, you could end up paying yesterday’s prices for today’s value. Treating people with respect and courtesy will make negotiation easier in the long run, but if the deal doesn’t work, keeping an open mind and being prepared to wait for the next opportunity will save you money, headaches, and time in the end.
At any time, there are properties priced too high, too low, or right on the money. For this reason, this list of pointers can be used in virtually any market cycle to maximize your opportunities. As always, your odds of success jump dramatically when you’re paired with a great Realtor to advocate on your behalf. Be sure to work with someone you know, like, and trust and you won’t be sorry!
