Many of us subscribe to the Old West credo that a deal is finished when both parties shake hands on it. If that's your way of thinking, then be prepared to get skinned alive when you buy real estate. The modern credo is "Never stop negotiating"--even after the deal is signed, even after escrow has opened, even after escrow has closed and title has passed to you. If you truly want to look out for your own interests, you won't stop negotiating!

Yes, this is a bit of an exaggeration. Nevertheless, those who do get the best deals in real estate are often those who keep right on negotiating as long as, so to speak, there's anything left on the table.

Negotiate as Part of Making an Offer

The entire process of making an offer involves negotiation. You purchase a home at a certain price for specified terms, including contingencies that allow you to back out in certain circumstances. The sellers read your offer and then either accept or, more likely, counter at a different price and with different terms. Perhaps they will eliminate some of your contingencies and modify others by limiting them - for example, in terms of time. Thus the sellers may agree that you can have an inspection, but you must approve the report within, say, 14 days.

Back and forth it goes with counteroffers, and counters to the counteroffers and counters to the counter to the counteroffers. This is the negotiation process and, depending on how good you are at it, you'll get a better or worse deal. If you get a deal that's acceptable to you and is the best you feel you can get, and if the same is true for the sellers, there's agreement and everyone signs. The presumption is that the deal is made. Don't count on it.

Negotiate Over the Disclosures

A wise buyer knows that the really tough negotiations frequently don't start until after the deal is signed. Usually the next negotiation takes place over the disclosures. Within a few days of signing, you should receive a list of defects (if any) in the property as revealed by the sellers. If you get the list before negotiation starts, then this point is moot. Our policy at Julie Noyasis to attempt to receive the Seller’s Disclosure Statement prior to making an offer; otherwise, it is made as a contingency in the contract offer.

If your offer was properly filled out, it is now quite possible that you can back out of the deal without penalty. If something seriously wrong is revealed, you may want to simply say no, take back your deposit, and move on.

Or you may want to negotiate some more.

You do this by letting the sellers know (through their agent, if they have one) that you disapprove of the disclosures because of the problem(s) they reveal. However, you're willing to go through with the deal if the sellers either repair the problem or reduce the price. If it's price you want, you indicate what you consider to be a fair price (sometimes a figure significantly lower than what was originally agreed upon), and negotiations begin again. Typically the sellers will balk, but if they want to sell and there is a problem, they very likely will counter your offer. Back and forth it goes until both parties feel they can live with the same set of terms.

Negotiate Over the Home Inspection

The next negotiation frequently occurs over the results of the home inspection.

It's rare that a home inspection, even of a brand new home, will reveal nothing. Usually there's something, even if it's just leaking faucets. Depending on the severity of the problem(s) discovered, savvy buyers now open negotiations all over again.

How can you do this? Remember, a good inspection clause is actually a contingency that, in effect, makes the purchase subject to the buyer's approving the inspection report. You don't approve. There's no deal - unless the seller is willing to come down in price or up in terms.

Keep in mind that problems such as these usually arise two weeks or so after the deal was originally signed. During those two weeks the sellers have begun making plans to move. They may even have put down a deposit and made a deal on another home. They are counting on your deal going through.

Why would the sellers be so accommodating? It's not that they want to. It’s just that once a problem is revealed, it will have to be dealt with one way or another, either with you or with other buyers. It might as well be you, since you're already involved in the deal.

You may negotiate a cash settlement without actually having a disclosure problem corrected, provided the lender doesn't object. For example, the seller s may lower the price $5,000 over a leaking roof. However, instead of replacing the roof, you have it patched for $500 and pocket the difference (at least until the next rainstorm).

Don’t Be Unreasonable

Don't pressure sellers too far. If you insist on unreasonable demands, they may simply refuse and buckle down, ready to fight you legally. That could mean you'd lose the house and have legal problems to boot. The Golden Rule? Treat people, as you would want people to treat you.

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