On Negotiation
Many home sellers and home buyers fear “realtor-free” real estatedeals for one simple reason. They believe they are poor negotiators. As is trueof most endeavors, in negotiating a deal a little preparation goes a long waytoward achieving one’s goals.
With this in mind, review the following principles of negotiation and realizethat you’ve already negotiated countless times in your life. Here’s your chanceto save yourself lots of money by remembering what you already know.
Principles of Negotiation
1) The least motivated party has the most control.
Prepare yourself to be patient. There are plenty of houses to buy and plentyof buyers. You don’t need to deviate far from a fair price.
If you’re not willing to walk away from the deal, and the other side knowsit, then you’ve already lost. If you want to stay in control, don’t fall in lovewith the house, or with your asking price.
2) The party with the most knowledge gains the most benefit.
All the arguments in the world won’t change the value of a property. Ifyou’ve independently determined what that is, then you’re not going to sell toolow or pay too much. At this point, negotiating becomes an attempt to learn theother party’s level of knowledge.
3) Ask for more than you will accept.
Even if both sides of the bargaining table have perfect knowledge of theproperty they will still need to feel as if they have negotiated a good deal. It’shard to feel you’ve accomplished something by negotiating if the starting andending points are the same.
4) Both sides must gain something.
You don’t want a disgruntled party on the other side of the table causing yougrief. Each party should feel that they’ve gained substantial benefit from thenegotiation.
Fundamental Skills of Negotiation
1. Preparation.
There is no substitute for knowledge. Exercise diligence in your research andyou’ll have an accurate assessment of the subject property’s value. This is themost important piece of information in negotiating a deal.
2. Know your bottom line.
Knowing what you want will make it much easier for you to bargain. If you’renot quite sure what your house is worth (or how much you can afford to spend, ifyou’re buying) you won’t be a confident negotiator. You won’t be able to committo a great deal when you see one, because you won’t be able to recognize it.Furthermore, your lack of knowledge will be evident to the other side and willfurther undermine your negotiating position.
3. Be detached.
The quickest way to lose control of a negotiation is to become tooemotionally involved. Obviously, buying and selling something as expensive as ahouse is an emotionally loaded experience, but cultivating a detached mannerwill help convince your opponent that you are a competent negotiator who iscomfortable with his/her position. Being too emotional will always beinterpreted as desperation and that gives the upper hand to your adversary.
4. Hear the other side.
If you can manage to be detached you’ll then have the opportunity to listento and observe your opponent. You’ll be able to tell if the other side is toonervous, if they’re bluffing or if they’re willing to compromise.
Deals fall through all the time not just because the two sides couldn’tagree, but also because they misunderstood each other. Listen to the other side.If you’re not sure what they’re saying, ask for clarification.
Keep in mind that although the people on the other side of the table arelikely nice folks, they are your opponent. Don’t let their friendly attitudecost you money. You can bet they’re not willing to shift their position becauseyou’re a charming conversationalist. Of course, you should always be polite andfriendly. Offended by your opponent’s offer? Politely tell them you enjoyedmeeting them and appreciate their interest, but that you’re so far apart thatfurther negotiations would be fruitless.
5. Communicate clearly and concisely.
The more you say, the more you’re likely to give away. You might evenconsider negotiating only on paper. After all, no verbal real estate deals areenforceable. A polite, “we’ll carefully consider all written offers”can greatly enhance a nervous negotiator’s ability to control the process. Itwill give you time to evaluate the offer fairly and greatly reduce theeffectiveness of pressure tactics.
6. Don’t be greedy.
When you’ve reached your goal be satisfied and close the deal.