Tips for Negotiating a Lease - Seller

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photo credit: Sweet One

When negotiating a property lease, the seller typically has the upper hand. This is true for a number of different reasons that hold true despite changes in the market that sometimes favor the buyer. However, only a seller with good negotiating skills is going to be able to make the most of this upper hand in order to come out of the negotiation with a lease agreement that is favorable to the seller. This is particularly true during a buyer’s market but is even true in a seller’s market. The art of negotiation is something that can’t be learned too well or too soon if you’re in the market to be selling anything at all.

Here are some tips to follow if you want to negotiate a lease that is going to be in favor of yourself as the seller of a property:

• Write up a good lease from the get-go. This is the area where the seller really has the upper hand. A negotiation pits two parties against one another to make a compromise that balances both of their interests. However, the party that typically writes the lease for a property purchase is the seller which means that this is the party that gets to set the intial terms. The party that sets the “back and forth” to begin with usually gets closer to what he wants than the party negotiating those terms. Make sure that you take a lot of time in the beginning to write up a great lease that emphasizes your position. Be aware that you’re going to be negotiating down from this point so you want to set the terms high to begin with. You may start with a generic lease but go through it with a fine-tooth comb to make amendments that favor your terms.
• Work with a lawyer. As the seller, you want to make sure that all of the legal i’s are dotted and t’s are crossed. You don’t want to leave anything to chance that could come back and bite you later. It’s best to work with a real estate lawyer throughout the process but at the very least you want to make sure that all contracts have been reviewed for legal issues before they are sent to the buyer for consideration.
• Know what you’re working with. In regards to a fair asking price for the home, you need to know what you’re working with. You need to get an assessment of the value of the property. You need to find out what the median sale price of comparable properties is. You need to determine what a fair asking price is. You can certainly try to negotiate a higher price than this but the buyer isn’t going to want to pay more than what’s fair so you need to get a realistic picture in mind for what that is.
• Consider the market when drawing up the lease. If you’re offering the sale of the home contingent on a lease option then you need to consider the market when determining the value of the home. If the value of the home is going to rise, you don’t want to give it away at a bargain price.
• Details are where all of the perks are at. The main thing that the buyer is going to be concerned about during these negotiations is money. He or she won’t look too closely at a lot of the other details of the lease which is where you can get some of your money back. Figure out what types of non-monetary requirements and desires you have that can be worked in to the lease so that you get some perks for the price that you’re negotiating towards.
• Be willing to call the bluff of the buyer. Know in advance what your terms are and what you’re willing to compromise on. If the buyer is pushing for a lease that’s not within those boundaries, don’t be afraid to call his bluff. In most cases, the buyer wants the home and is going to go ahead and meet the terms that you’re asking for. This is truer in a seller’s market than in a buyer’s market but it can be true at anytime. The buyer just wants to buy a property and get the deal done. You want to get the most that you can from the transaction. Remember that you’ve got the upper hand and don’t be afraid to look for another buyer if you don’t like the one that you’re working with.

The seller starts out the negotiation of a property sale with the upper hand. You have something that the other party wants and you get to set the initial terms outlining how they can get it from you. However, you have to follow good practices of negotiation to make sure that the process proceeds smoothly in your favor from that point on. If you do, you should find the deal sealed with a lease agreement that is closer to your original goals than to those of the buyer.

Tags: Negotiations | Property Management | lease | real estate

This entry was posted on Sunday, June 22nd, 2008 at 3:30 am and is filed under Mixed Bag. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.