Negotiating Closing Costs in a Buyer's Market

Negotiating closing costs in a buyer's market is the easiest time to negotiate. The basic rules of negotiation apply. If you are the buyer in a buyer's market, you have a large degree of leverage. If you are the seller in a buyer's market, you may have to be more flexible than you would like to be. If you are involved in a real estate transaction, closing costs can represent a significant amount of money in a real estate deal. Therefore, you want to make sure that you are not paying all of them by yourself in most cases. Here are a few tips for negotiating closing costs:

Ask For What You Want

Regardless of what kind of market you are in, you need to make sure that you ask for what you want immediately. You need to establish the objective early on in the negotiation. Let the other party know that you are after certain terms. It is usually a good idea to ask for more than you really want. This way, you can concede, and still get what you want.

Silence is Golden

When you are in the middle of a negotiation, sometimes silence is more powerful than anything you could possibly say. When you make an offer, you need to remain completely silent until the other party speaks. Even if the room is silent for five minutes, you need to stay as silent as possible. Many people feel very awkward in the middle of silence and naturally try to fill it with anything. After they make an offer, they immediately start to detract from it and negotiate themselves out of it.

For example, if you are the buyer, you could say, "I think you should pay for 75% of the closing costs and I'll pay for 25%". Once you say that, do not say a word until they say something. Some people in this situation would immediately say, "Or we could do 50-50 if you are more comfortable with that." Just because the seller sat silently for a second, the buyer thought that they did not like the offer. This leads many people to basically retract their offer because they cannot be patient. 

Get Everything in Writing

When you are negotiating, you need to make sure that you get everything in writing. When you agree on something, you both need to sign off on it immediately. The more time that passes after a negotiation, the more likely someone is likely to forget what was talked about. They might decide that they do not like the terms and change their mind shortly afterwards. This makes it critical to get everything in writing as soon as you can during a negotiation. Remember that in real estate, verbal sales are invalid. Everything must be in writing, until it is, it cannot be enforced or recognized.

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