At What Point Do Negotiations Get Personal?

The Negotiation

Buyer: "This is my final price."
Seller: "This is my final price."

And now, what happens to that gap between the ask and bid price?

How Did We Get Here So Quickly?

Well, it gets quite personal at this point. Everyone is either offended or has their heels dug so far in to the sand that they are willing not move and worse, walk away.

Such an unfortunate way to negotiate and yet, within each price range there is that amount where it gets personal. In general, residential real estate sales negotiations lose that business negotiation feel the closer we get to a deal. Why is that? "Expectations" of course.

For every counter offer written, confidence in the other party erodes. No one wants to be taken advantage of, and so, at some point, this "feeling" gets in the way. Residential buyers and sellers say they want to be fair in negotiations and yet, fair is undefined.

Okay, I just gave away the solution! "Fair" is undefined.

The Real Estate Agent's Role

As real estate professionals, we have to manage our clients expectations. "Managing" should not be a bad word, nor should it be understood to mean we will tell our clients they will not get what they want.

Our role is to discuss, in advance, what "fair" means to them, before they are in a negotiation. And the only way to absolutely define fair between the parties is to write that last counter offer, the one no one wants to write.

Selling or buying real estate is not like buying a retail product with a price tag on it. Retail pricing have costing methods and profit goals applied based on competitive market knowledge. Home ask prices are a mix of competitive market knowledge and emotion.

Ahhh, "emotion". This is that final gap that makes or breaks deals.

Educate Clients With Our Experience

As real estate professionals, we can speak with our clients about establishing a pricing and negotiations strategy in advance.

We can speak to what will happen when on a $250,000 transaction we get down to that last $5,000 in negotiations, or on that $500,000 how will we deal with the $10,000 difference. For more heterogeneous and upscale properties, there are other formulas to deal with the gap.

And then, at every offer stage, go back and discuss the strategy with our clients to help them work through it. If we do not, and a deal falls, there are costs for our clients.

It could be not finding a deal as good next time, it could be more time on market, it can even end up with no sale at all.

Keeping It Real Is Our Job

This is our profession and I find many of us just don't understand that the most important part of negotiating is keeping client expectations real.