Negotiation is a subtle art in real estate, and not all negotiators are built the same. The key to a successful negotiation, is when you find some common ground that satisfies all parties. On the other hand, using the wrong negotiation tactics can sink a deal pretty quickly. Here are some negotiation tactics to consider – and some to avoid:
- Lowball offers: Yes, its your job to negotiate the lowest price you can for your buyers, but there is a line between negotiating and lowballing. Going far below market value when you make an offer may damages the credibility of the buyer and can be insulting to the seller. The seller and their agent have a range in mind that they’ll accept, and if you’re not even approaching the low end of that range, you risk the seller not wanting to even consider the offer.
- Incremental negotiations: How many sign-backs are too many? Instead of continually going back to the seller with small increases in your offer ($1,000 or less), try discussing with your buyer a strategy that will leave the seller wondering what will happen if he doesn’t consider your offer. The constant back-and-forth can grow tiresome and lead the seller to consider other opportunities. What you want to aim for, is a persuasive offer – leaving any small increments to the final stage of negotiation.
- “Take it or leave it”: This is always an interesting tactic. And honestly, sometimes it works. But sometimes it doesn’t. Think of negotiating as having a dialogue. Try not to draw a line in the sand with your initial offer. It may cause the seller and their agent to get defensive if you immediately show that you’re unwilling to budge. Even if it’s true, don’t make a show of it.
- Nitpicking after inspection: Obviously if inspection reveals a major issue, it should be factored into the final sale price. But insisting on a lower price for every minor repair can put negotiations in a stalemate. This is where the scene turns from negotiating to insulting. Discuss with your buyer what normal wear and tear is, and when there is really cause for concern.
- Asking for more, more, more: Some buyer clients will request that the sellers throw in add-ons like furniture or appliances that weren’t included in the listing. These are deal-killers. I have seen my fair share of deals fall apart over dishwashers and mirrors. Prepare your buyers and sellers before offer presentations. It might be worthwhile discussing that, while a buyers request may come across as greedy, more often than not – they are just trying to get the most value for the price.
Negotiate is not an argument. Win-lose scenarios always leave one party unhappy and guess who pays the price for that? Yep, you! Aim for a win-win scenario, and you will be on your way to a successful negotiation!
Contributor: Michelle Risi, President of the Real Estate Academy