photo credit: matrianklw
Whenever you negotiate a lease for anything, you are engaging in a battle between people who have two opposing desires. Ultimately, you aim to reach a compromise between those desires which satisfies both parties. Of course, you would prefer to get everything that you want from the deal but that’s not what a negotiation is all about. Nevertheless, there are certain things that you can do to weigh the odds more heavily in your favor so that the outcome is closer to your original desires than to those of the person with whom you are negotiating.
As a property buyer, here are some of the tips that you’ll want to follow to negotiate a lease that ends up in your favor:
- Do your homework regarding property values. The main goal for the buyer of a property is to reduce the cost of the purchase by as much money as possible. The reality of the market is such that you aren’t likely to be able to get a better deal than the best deal that is available for comparable properties in the area. Because of this, you want to make sure that you’ve done extensive research into the cost of those comparable properties. Find out what the high and low costs are as well as what the median cost is. You want to aim for a lease that allows you to purchase the property at a cost somewhere between the low end and the median. Your goal is to not pay anything above the median range for the purchase. That’s because you can probably get something comparable on the market for the median price so you can always walk away from this one and look elsewhere.
- Make sure you understand the lease option. If you’re entering into a lease option to purchase a property then you are effectively committing to making the purchase in the future at the price agreed upon today. However you’ll be living in the home for a period of time (generally about one year) before you actually go ahead and purchase the property. Assess the housing market to determine whether this is a move that makes sense. If home values are likely to decrease in the area within that year, it doesn’t make sense to move forward with the lease option. If you still want to do the lease option, keep the changing market in mind as you determine the price that you’re willing to pay for a home.
- Get an expert to help you. It’s always best to negotiate a lease with the assistance of a real estate expert. This will help you to better understand the legal issues that are involved in negotiating the lease. It will also give you a resource for getting additional information that can assist you in decision-making. In some cases, the expert may even do some of the negotiating on your behalf so that you don’t have to do it yourself.
- Practice your negotiation skills. The home seller has probably done this before and is going to have the upper hand in that regard. You’ll want to practice your general negotiation skills so that you don’t lose out during the interaction. Role playing scenarios with your real estate agent can help immensely in this area.
- Set your terms in advance. The key to a good negotiation is knowing what you want before you go in. Consider not only costs but other issues that are going to come up as part of the purchase. Home repairs and inspections, responsibility for landscaping and issues related to closing costs are all negotiable as a part of the sale. Make sure that you have thought each step through and outlined in your mind how much you’re willing to negotiate before you step away from the deal.
- Be willing to step away from the deal. An important thing to realize when negotiating is that you have to set a bottom line for what you want and to be fully committed to walking away from the deal if you don’t get a lease that meets those terms. As a buyer, you want to make a purchase that you can live with for a long time to come. If you’re not committed to walking away, your bluff may be called and you may end up with a property that you regret. Nobody wants that.
These tips are designed to get you closer to your goals when negotiating a lease. You won’t get everything that you were hoping for but you should be able to secure a lease with favorable terms.