Dear Heather: My husband and I put an offer in on a property last year and we lost the deal. Do you have any advice to improve our odds? — Buyer

Dear Buyer: Whether you’re a buyer or a seller you want to succeed in the realty marketplace. That’s natural and reasonable, but what are the steps you need to triumph?

Negotiation is a complex matter and all transactions are unique. Both sides — buyer and seller — want to feel that the outcome favours them, or at least represents a fair balance of interests. In the usual case there is a bit of negotiating, some give-and-take, some compromises on both sides and neither party gets everything they want.

So how do you develop a strong bargaining position, one which will help you get the most from a transaction? Experience shows there are some basic keys which will determine who wins at the negotiating table.

1. What does the market say?

At various times we’re in a “buyers” market, a “sellers” market, or a market where housing supply and demand are roughly equal. If possible, you want to be in the market at a time when it favours your position as a buyer or seller. (We are currently in a buyer’s market)

Because all properties are unique — it is possible to buck general trends and have more leverage than the marketplace would seem to allow. For instance, if you have a property for sale in a desirable neighbourhood with few sales, you may be able to get a higher price than say at the extremities of the island where there may be a lot of inventory.

Or, if you’re a buyer who can quickly close, that might be an important negotiating tool when dealing with an owner who is very motivated.

2. Who has leverage?

If you’re on the front page of the local paper because your business went bust — and the buyer knows it — you have little clout in the bargaining process. Alternatively, if you’re among six buyers clamouring for that one special property, forget about dictating an agreement the owner can sit back and pick the offer which represents the highest price and best terms.

3. What are the details?

A lot of attention in real estate is paid to transaction prices. This of course makes sense, but the key to a good deal may be more complex.

Consider two identical properties that each sell on the same day for $750,000. The houses are the same, the sale prices are the same, but are the deals the same? Maybe not. For instance, one owner may have agreed to paint the property, replace the kitchen appliances, fix the roof and do some extensive landscaping. The second sale may have no owner concessions. In this example, the first house actually sold at the $750,000 purchase price, but less the value of the contingencies. If you’re a buyer, this is the deal you want. If you’re a seller, you would prefer to be the second owner and give up nothing.

4. What about financing?

Real estate transactions involve a trade — property for money. We know the property is there, but what about financing? There are several factors that impact the money issue, but here is a good place to start.

Has the buyer been preapproved by a lender? Meeting with a lender before looking at homes does not usually guarantee that financing is absolutely, unquestionably available — a loan application can be declined because of appraisal problems, title issues, survey findings, or other reasons. But, buyers who are “preapproved” at least have some idea of their ability to finance a home and know that they are likely to qualify for a mortgage. The result is that pre-qualified buyers represent less risk to owners than a purchaser who has never met with a lender. If the seller accepts an offer from a buyer with unknown financial strength, it’s possible that the transaction could fail because the buyer can’t get a loan. Meanwhile, the owner may have lost the opportunity to sell to a qualified buyer.

When you are a buyer or a seller, imagine you are in a fight. The other guy has a black belt in Martial Arts — and you don’t. Who’s going to win?

A licenced real estate agent can provide you with support and guidance, to ensure you manage the complexities of the deal with the aid of experience and knowledge.

Heather Chilvers is among Coldwell Banker Bermuda Realty’s leading sales representatives. She has been working in real estate for 25 years. If you have a question for Heather, please contact her at hchilvers@brcl.bm or 332 1793. All questions will be treated in confidence.