The best negotiators bring an attitude of high expectations to the table. They are hard on the problem and soft on the people. Letting the buyer know what you need, in a clear and reasoned way, is the first step toward getting it.
We try to keep all of these goals in mind:
- Enable you to move on to your next home.
- Obtain the highest possible price for the property.
- Close within an acceptable time frame.
- Solve any repair issues fairly.
- Have no title, survey or loan problems, or solve any that do arise.
- Develop a good working relationship with the buyer.
- Have no future problems after closing.
Is a cooperative or combative approach more effective?
- Our experience shows that the cooperative style is the most effective and efficient way to complete a transaction.
- Professional negotiators usually try to preserve the relationship between the parties, and work together to resolve problems.
- The goal is not to reach an impasse in which neither the seller's nor the buyer's needs are met.
The combative style is sometimes encountered.
- This strategy includes: negative comments, emotional statements, table pounding, threats to walk out, ego involvement, and stated positioning.
- Creative solutions and trade offs are not as likely to be found in this environment. Working with a combative style negotiator requires a disciplined approach.
- Do not respond emotionally. An angry or defensive response will escalate the negotiation into a no-win battle.
- Do not argue. Arguing usually positions them more strongly and drags the negotiation process off course.
- Do not ignore their arguments or statements. Listen carefully, but do not accept or reject.
- Firmly anchor pricing and other terms to the marketplace. Show that the price has not been chosen arbitrarily.
- Reduce misunderstanding by following up with written summaries of discussions.
- Do not allow hazy or unclear proposals to stand.
- Offer some "wins" on some of the terms. Face saving is very important.
- Look for ways to meet their underlying interests.
- Remember that they may be a qualified buyers who can satisfy your goals.
Is every point in the contact negotiable?
- Yes. However, one of the most effective means of coming to an agreement is to rely on consistent standards or norms when possible. For example, it is common practice for the seller to pay for the title policy and for the buyer to pay survey cost.
- Using accepted standards prevents buyer and seller from haggling over every point.
- Working within the accepted "norms" for our area helps to legitimize offers, and focus the negotiation on just a few points.
- On the other hand, all the points in an offer can be used to help structure the deal. They offer trade-off opportunities for both parties to get what they want from the negotiation.
The value of trust in a negotiation
- The value of trust in a negotiation cannot be overstated. Most people are fair minded and reasonable. They respond well to respectful treatment and to having their concerns heard.
- If the buyer feels that the seller and agent are acting with integrity, their attitude will be much more cooperative.
- Contract negotiation is a sensitive area, and anxiety can be high.
- The buyers may have had an unpleasant past experience with buying a home. The seller may be under pressure, with future plans at stake.
- Acting with integrity does not mean that all "cards have to be put on the table." It is not proper to discuss personal issues that affect the seller, such as your cost basis in the house or urgency to move.
How to develop trust.
- Listen and understand what the buyer has to say.
- Express appreciation for the buyer's interest in your home.
- Respond within a reasonable time to counter offers.
- Disclose property condition thoroughly.
- Reveal some personal information about yourselves.
- Offer a neighborhood directory, list of service people, introduction to neighbors.
- Finding common ground with the buyer can be a very powerful reinforcement of the buyers choice of your home.
- People need confirmation of their decision. Knowing that you are "like them" helps confirm this. This can be subtly communicated through the agents.
- If you meet the buyers during a visit to your home, it is important to make them feel welcome.
- If it is possible to find some common ground with the buyer (mutual friends, careers, hobbies, church, etc), this will contribute to reducing their anxiety and gaining "relationship leverage."
Understand your leverage
- How you respond to your offer will depend on your leverage.
- If the buyers love your house and it fits their needs perfectly, you have great leverage.
- If their time frame is long or short, and you can meet it, you have some leverage.
- It is very helpful to know which items are of concern or may be rejected by the buyer. You can then offer information or concessions that appeal to the buyer's deepest concerns.
- Timing is an important consideration. If the house has been on the market for 300 days you have less leverage than you would with a brand new listing.
- If the buyer is an investor, he may have a take it or leave it attitude.
- If you have multiple offers, you have excellent leverage.
The Buyer's Option Period
- Our standard contracts include a short "option period" (usually about 7-10 days) in which the buyer can terminate for any reason.
- Often sellers feel that they are at a disadvantage, since the buyer can terminate the contract, but they cannot. (It is true that we all breath a sigh of relief when the option period is over. )
- In the long run the option period protects the seller by allowing time for the buyer to do inspections and pursue any open questions about the property.
- Keep in mind that the buyer has taken the first step in a big decision. Once the ball is rolling it is easier to stay on track. Action creates commitment. There are subtle pressures to move the contract forward (face saving, time and money investment). Properties close about 90% of the time after they go under contract.
Responding to a "Low Ball" Offer
- There is a point at which an offer is so low and poorly considered that it should not be legitimized with a response. However, most of the time we are in favor of responding to offers. Here is why:
- The buyer may be unfamiliar with our local norms. About 1%-3% price reduction is fairly common. In his market, greater price reductions may be commonplace.
- The buyer may be unfamiliar with the market data for your home. By showing sales data and special features of your home we can help build his confidence.
- The buyer is trying to bring your price to a lower range. However, he may be willing move up to an acceptable range, after starting out low.
- It may be the buyer's background or culture to negotiate aggressively. Once the terms are settled, he may be become very relationship oriented.
- By refusing to counter an offer, we are adding a little slap to the ego of the buyer. He may choose to go away, rather than submit another offer. We will loose an opportunity to see how high he will go.
- Keep in mind that you can make verbal responses that do not obligate you. You may still accept another offer, if one should come in, while you are talking with the first party.
Responding to an Acceptable Offer
- It is acceptable to take an evening to discuss the offer.
- If an offer is accepted within 10 minutes, the buyer may feel uneasy.
- If some changes are needed, we usually address these verbally, and require that the buyer incorporate the negotiated changes into their signed offer. This allows your property to stay on the market until you have a completely acceptable offer to sign.
- Buyers should submit a letter from a mortgage lender giving their qualification status.
- They may submit a "pre-qualification" letter - meaning that they have spoken with a lender concerning their qualification status.
- We prefer that the buyer be "fully credit approved" - meaning that a credit report has been done and income verified.
Responding to Multiple Offers
- Multiple offers must be handled very carefully and fairly to avoid angering or losing the parties.
- We prefer disclosure to all parties that there are multiple offers on the table. This maximizes your ability to obtain the best possible price.
- We prefer not disclose the terms of the offers to any of the parties. This may result in distrust of the process by the parties, and the possibility of loss of the buyers.
- Each party should be given an equal opportunity to raise or adjust his/her offer by a certain time.
- After that time, the seller may review all offers and choose one to work with.
- The selected offer may be countered or accepted as is. You are not obligated to choose the "first" offer that came in.
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