Strike the Best Deal on Homes for Sale in Kona Hawaii
If you’re in Hawaiian real estate investment like us, you know that the process of buying and selling homes for sale in Kona Hawaii is never straightforward. Even if you are confident and skilled in the logistical elements of investing, it can be extremely difficult to feel secure in face-to-face negotiations. Beyond facts and figures, it is essential that investors have prowess in human interaction and an understanding of the nuances of negotiation. The game becomes even trickier when your objective is to settle on an offer that is below asking price.
How can investors settle below a seller’s asking price on homes for sale in Kona Hawaii with ease? It is a matter of being both flexible and tactical. Read on to learn how to establish rapport and conduct difficult conversations with sellers.
Partner With Your Seller
If you view the seller as a business opportunity—someone to extract profit from—you may find the negotiation process trying. The seller, just like you, is looking to make a profit. It’s likely that, because of the nature of real estate, you are working with a seller in a financial bind. Financial stress, in turn, can complicate negotiations, particularly if a seller feels that they are being preyed upon.
It is crucial that you position the seller not as an opponent, but as an ally. In doing so, you establish trust instead of competition. You encourage the seller to work with you instead of against you. You prioritize cooperation for mutual benefit over heated, tit-for-tat negotiations that are hard to get off the ground.
Make clear to the seller that you share an objective: a fair deal. You also share a common obstacle: the market for homes for sale in Kona Hawaii. By positioning the market as the real contender, you create more leverage for yourself in negotiations. The seller will see you as a knowledgeable support system instead of an adversary. Then, as the one with the know-how, you will feel confident in being directive during negotiations.
Clarify Your Expectations
It is important to clarify your expectations with the seller from the beginning of the sale. Identify your common obstacle—the market. Explain that, though you are interested in establishing a deal that is mutually beneficial, fluctuations in the market may put your and your seller’s objectives at odds. State that it is never your intention to reap profit at the expense of the seller. Rather, you need to defend your bottom line and hope that the market will allow you to do so in a way that benefits the seller.
It is best to establish these expectations in a contract. In this instance, a contract serves less as a legal tool and more as a formal assurance of your interest in supporting a seller. A written contract displays forethought and commitment, even if it is not legally binding.
It is important that you clarify in your contract that, if the seller has the inclination that a positive deal cannot be struck, they will withdraw from the process. Doing so reinforces sellers’ confidence that you want what is best for them. It will also prevent you from expending energy on a dead-end deal. Encouraging your seller to be more communicative with you about their own expectations and fears will give you leverage in determining an acceptable, below-market offering price.
In initiating the discussions and contract, you establish trust and confidence. If you assure the seller you will work in their favor, they are more likely to work in yours. If they don’t view you as an opponent, they might be inclined to give you a better offer. The goal is not to manipulate a seller into false beliefs about your intentions, but to build a team with genuine confidence and rapport.
Ask Questions
Before you make any sort of offer on a property, it is important to research homes for sale in Kona Hawaii and ask questions that will help you gauge the true value of the property.
Of course, you will want to ask the usual questions— the number of bedrooms and bathrooms, size, amenities, needed repairs, etc. But you will also want to learn more about why they are selling their home and what they believe it is worth. Be sure to ask: What is their estimated value of the home, and why? When are they looking to move, and why? Why did they choose to sell their home in the first place? The goal is not to interrogate your seller. Express your interest in their circumstances for the sake of helping them the best you can. The answers you receive will help you form an offer that is palatable to your seller.
Assess Value
In addition to asking questions, viewing the home is key to assessing its value. When they are showing the home, take notes on all damages and necessary repairs so you can later determine the costs of addressing them. When you notice problems, communicate with your seller. Ask them if anyone has ever looked at the problem, what they believe it would cost to repair, and how long it has been an issue. It is also appropriate for you to indicate features of the property that you believe should be fixed, even if the seller has not addressed them. Doing so highlights your knowledge and attentiveness, so long as you do not assume a tone that is critical or attacking.
Finally, you must do your research to try to determine why the house isn’t selling and what would be a reasonable offer to make on it. Drive around to examine other homes for sale in Kona Hawaii to gauge the market. Study the market conditions to determine whether houses are being sold above or below market values. Once you know the conditions of the local housing market and have examined the state of the property, you may be able to determine why it hasn’t been selling. Examining the market and the house will allow you to more accurately gauge the value of the home. Once you pinpoint this value, subtract the value of repairs, and determine your desired profit, you will be ready to make an offer.
Initiate Negotiations
Once you have identified what you believe is an appropriate offer, it is time to talk numbers with your seller. You need not approach your seller with a hard offer. In fact, it is more beneficial to determine prices together in conversation than to barter with your seller. Before you present your value, reiterate the sentiment that it is you and your seller against the market for homes for sale in Kona Hawaii and that the market will determine whether a mutually beneficial deal is possible.
You should then suggest what you believe is a reasonable price and remain open to their reactions. Doing so will allow you to gauge the seller’s thoughts and feelings on pricing. Be sure to ask them if they believe that your offer sounds right. While it is important to be confident in your assessment and have a rationale for your calculations, it is also important to acknowledge the merit of the sellers’ assessments and ideas.
If they reject your assessment, you have other options. Instead of continuing to lower your offer, inquire as to the lowest offer a seller would accept. If that number is suitable for you, you have a deal. If it is not, don’t fear—remember, it is still you and your seller against the market.
While you may choose to walk away from a deal at this point in time, your sale is not automatically doomed. A good real estate investor knows how to be persistent without putting perceived pressure on their seller. Communicate your interests to your seller. Express that your intent is not to reap a massive profit, but to stay afloat and make a living. Instead of accusing the seller of making an unreasonable offer, explain that, because of unfavorable market conditions, their offer poses a financial risk for you.
Terms and Agreements
At this point in the negotiating process, you will want to start introducing terms and agreements. Real estate investment deals usually adopt one party’s terms and the other party’s price. You may propose shortened contingency, a greater money deposit, or faster closing to incentivize your offer. Does your seller want the highest price or the quickest sale? Again, knowing your seller’s needs and interests will help you draft desirable terms for a profitable deal.
If your seller is still reluctant to lower their asking price, document the terms that would satisfy you. You should leave them for your seller to mull over. With further thought and research, or with the introduction of different terms, your seller might concede to a favorable deal. Follow up with your seller within 48 hours to determine their standpoint. If you cannot strike a deal, don’t worry. There are plenty of homes for sale in Kona Hawaii. A good investor always has additional leads lined up so that one collapsing deal does not prove a financial fatality.