Right now we’re going to start a five-part series on real estate negotiations.
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Marcia Edwards: We wanted to talk a little bit today about negotiations. It’s a tense time. You find something you want and you really want it, but you don’t want the seller to know that you want it that bad. The seller wants to make sure you know that a million people want that house at the same time.
Bob Nelson: Well, it’s interesting because we have a market right now where there is a great amount of inventory, and yet there are a number of borrowers out there that are financially qualified primarily because the interest rates are so low. You may earn a certain amount of money and you think, “Gee, I’m stuck being a renter.” Well, check with Marcia, because at a low interest rate, you may be able to afford a fairly large home with a fairly low mortgage payment simply because the interest rate is low.
Marcia Edwards: Right. So, when you’re looking at negotiations, you look at the overall climate, but you’ve got to remember that it’s really a micro market. You’re really looking at that specific home and saying, “Can this specific home be replaced or we duplicated that same opportunity.”
Bob Nelson: And certainly the principle of substitution, I’ll pay no more for this one than I’d have to pay for a substitute model. So, which is of course the simply buying comparison model that everybody goes through, whether it’s a gallon of gas, whether it’s a loaf of bread, or a house. I’ll pay no more for this one than when I would have to pay to get one of a similar utility at a different location.
Marcia Edwards: And you have to respect that law of substitution. You’ve got to recognize that as a buyer and as a seller and respect the other’s side and perspective on it. If there’s a lot of homes like this one, you cannot force a buyer to keep their attention on yours. And the reverse is true. If there’s a lot of buyers like you, but very few homes, you’re not going to keep your attention with the exception to the rule.
Bob Nelson: So, it’s an interesting process. The more you understand the market, the more you know where your negotiating strength or weakness in fact would be. And I think it’s important to know not just your strength, but also your weakness.
Marcia Edwards: That’s right. So, when you’re working with someone as a realtor, you’ve got to make sure that they understand all that they can about you going in, the edges of your negotiation, not where you’re just starting. You’re not negotiating with your realtor. Your realtor is your advocate in the transaction.
Bob Nelson: Exactly. However, your realtor may be pointing out certain options that are available that you may not be aware of. So, you may think that, “My gosh, are they working with me or against me?” Now, they’re probably trying to show you the options that are available.
Join Eugene, Oregon, real estate experts: Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments, and Marcia Edwards, Residential Real Estate Broker with Windermere Real Estate, daily at 5:30pm on KPNW for the “Real Estate Today” radio show.