The 5 Most Important Tips To Negotiating Real Estate Deals
In the international arena of negotiation, Americans are considered wimps because we believe in fairness, so we tend to “split the difference” a lot. In many cultures, fairness is not in play at all…which is another whole story. Splitting the difference is not negotiating and the only time you should do that is when the price difference has been whittled down to a puny amount and negotiations have faltered.
This is straight from the top negotiators. Some of it is common sense.
1. Know the strength of your Plan B option. That means, what will you do if you don’t make this deal work? You’ve heard it said that the person most willing to walk away has the most power.
- If you are a buyer and have three other houses you like, you have a strong Plan B and therefore can negotiate from a position of strength. If you have 3 days to find a house or you will be in the street, your Plan B is not so strong.
- If you are a seller and you’ve already made an offer on another house – not much strength. If you have multiple offers – you are in a strong position to negotiate.
2. Inventory your bargaining chips.
- People tend to think only in terms of price, but there is a lot more. For buyers – maybe the seller would like 3 weeks to move out or they really love their refrigerator. Think about giving them that to get the price you want.
- Sellers can negotiate appliances, lawn mowers, extended closings or the deck furniture.
- Earnest money, title company, closing date, performance dates are all negotiating points you can use.
3. Gather Information. You’ll be amazed at what we can find out.
- Buyers: let’s find out all about the property, the seller, and the other agent and arm ourselves with market data.
- Sellers: let’s find out about the buyer and their motivation, their financing, their time frame, and about the other agent and arm ourselves with market data.
4. Adopt a Win-Win philosophy.
- This is not war. You don’t need to grind the other side into the ground then step on their fingers. You also don’t need to feel like you just escaped the devil in a dark alley.
- People tend to think of win-win as not getting what they want. Not so. It’s about you getting what you want and feeling good about it and the other side getting what they want and feeling good. Remember, we don’t all want the same things and again, it’s not always about just money.
5. Stay calm…mostly.
- It’s hard to keep emotions out of the game, especially when it’s as personal as your home they’re ripping apart. Throwing hissy fits, taking a hard line, or being nasty just isn’t going to get the job done. By the same token being hurt and insulted is equally destructive.
- Negotiations are built on trust. If you are suspicious and don’t trust the other side to do what they say, it’s going to be a long escrow. I’ve seen parties lawyer up and want to start suing over nothing more then paranoia that was fantasized to the worst possible conclusion – that would never happen in a million years.
- The best way to stay calm is to: 1.) make sure everything is clearly covered in the contract, and 2.) make sure your Realtor is a skilled negotiator (as in, proof of training) as well as a competent problem solver.
Lastly…Listen, Listen, Listen and Don’t Talk Too Much In Front Of The Other Side!