Real Estate Negotiation: Best Strategies

An important part of my job as your Realtor is to help you negotiate for the best deal on a house. You can rely on my confidence and professionalism in this area. Here are some strategies that we use to guide your real estate negotiation and achieve the best result for you.

1. Trust.

Creating trust between the buyer and seller is the single most important strategy in a negotiation. Buyers and sellers have some conflicting interests and some that are mutual. It is valuable to look for the mutual interests and establish rapport. Show the seller that you will be reasonable to work with. Here are some ways:

• Look for relatedness. You may have a common hobby, the same type of job, lived in the same area, attended the same college, or have similar children's needs. For example, we worked with a buyer from a small town in Ireland. On a visit to the house, we were astounded to find that the sellers were from the same town! The seller got out a special Irish whisky for a toast.
• Show a mortgage letter or other evidence that you are qualified to buy the property.
• Do you work for a well-known company? This will increase the seller's trust.
• Never delay your counteroffers. Show respect for the seller's time.
• Let the seller know that you appreciate the home.

Begin the negotiation by establishing rapport. Then continue to reinforce it throughout the closing process.

Often buyers are reluctant to show that they like the house. They feel that negative attitude will help their negotiation. Not so. I recall a situation in which the buyers expressed to the seller how much they liked the house. During the negotiation the seller had multiple offers. Their offer was selected. The buyers' openness about how they felt won them the deal.

2. Ego.

While trust is the single most important factor in a negotiation, hurt ego is the most destructive. Here is an example that I have seen many times: Buyers send a note along with their offer. They point out faults in the house, and explain why it is not worth the price. Do you think these buyers paid a premium? Of course they did!

The point is, never run down the sellers’ home. This will bring hurt feelings to the table. This is very hard to overcome. If you have a chance, compliment the sellers’ house, their decorating and gardens. Remember that their children are always above average, and their pets are practically human.

3. Team.

It is crucial that we present a solid front. A united front is a strong negotiating position. This may not be the way things really are. The husband, wife, friends, relatives, and agent may not all agree on every term of the offer. If you reveal a break in your ranks, the sellers will consider your position weaker.

4. Grain of Salt.

Experienced negotiators know that a healthy skepticism is a good thing. How many times have you heard that the contract has to be in this quarter, or the price is going up? Does the 1% bonus for contract this week mean that you have to rush your offer in? Is the price really firm? Not everything you are told is true.

Proposals such as these show you what is important to the seller. The seller may want to close quickly and for full price, but, the seller may also want to close, period. I can think of many times when I thought the buyer's offer would not work, and yet, they got close to their terms.

5. Special Needs.

Little things can make a big difference in a negotiation. Sometimes a good process can go off track because of differences in style or personality. If subtle needs are overlooked or misread, this can lead to a decline in trust. For example:

• Slow Down - The sellers were a couple in their 90's who were not into technology. The buyers met them several times, since they did not leave the house. They always sat down to visit, were served a soft drink, and formed a great relationship.
• Show Respect - The sellers were very sensitive about the small gravesite for their dog on the property. It made all the difference that the buyers put into their offer that they would leave it in place.
• Feed the Birds - The sellers had lots of bird feeders in the back yard. The buyers noted this, and offered to continue feeding the birds.
• Take Control - In this case the sellers’ agent tended to give wrong information and was simply untrustworthy. In order to preserve the buyer’s trust, it was necessary to double check everything, handle paperwork, and watch deadlines.

6. Privacy.

You may have some issues that should be kept private.

• You may have just sold house, and need to act fast.
• You may need to start kids in school.
• You may be in the middle of a divorce.
• You may have an interest rate that is about to expire.

Not one of these bits of information will get you a better deal on a house. On the contrary, they all indicate that you are under pressure. The best presentation is that you are a buyer who is well qualified, who truly appreciates the home, and who can be trusted to close.

7. Good Information.

Here are some questions to ask before you submit an offer:

• How is the market in the area? How are other actives priced? What about recent sales?
• How long has the home been on the market? Have there been price changes?
• Did this house sell in the last year or two? What was the price?
• Is there a time deadline that must be met? Would a pre or post lease help?
• What are the taxes, appraisal district value, and HOA dues?
• Is there a seller's disclosure available? A property inspection? A survey?
• Are there any offers on the table now, or any expected?

Price is not the only consideration in the negotiation for a home. Financing, close date, repairs, or possession date may be just as important to you or to the seller. Negotiating the best deal for your home requires skill in building trust, a good presentation, and market knowledge. And a great agent!