Home : Blogs : Kathleen "Kate" Elim LAKE ANNA, VA Real Estate : Lake Anna VA Real Estate Specialist - Kathleen Elim

Why Split the Difference?

Since I started in real estate back in 1986, there's been this prevailing view that when negotiating price you split the difference.

Buyers and Sellers are not the only ones that seem to be buying into this. Many REALTORS do also. I cannot tell you the number of times, while negotiating, this comes up. If so and so offers such and such we'll split the difference and go to such and such. The other party than says: If so and so offered such and such we'll split the difference and offer such and such.

Please raise your hand up high if you have been party to such a negotiation!

The first Active Rain post I read today contained the following:

I guess this may be a starting point. But even if we split the difference...

There is a reason we think in these terms...we've experienced them too often.

Here is an example of how it often unfolds:

Listing is priced at $500,000.
The initial offer is $440,000
Seller counters at $470,000
Buyer than counters at $455,000
Seller accepts at $455,000 or counters at $462,500

Why?

When I am involved in a negotiation I resist dividing the difference. Once you fall into that trap the other party expects that it is the way the negotiations will go until resolution. if you change your tactics they are taken by surprise because they had already begun to anticipate what your response would be as soon as they have determined their figure. They actually expect one of three things:

You will accept
You will walk away
You will split the difference

Mix it up a bit. I am not suggesting this just to play games. I am suggesting it because I believe there should be a reason that you put forth a figure. Put some thought into it.

There is not a hard and fast rule in real estate negotiations that says splitting the difference is the way things are done. If your buyers and sellers do not understand that they may be be in for a surprise. If there is one thing we do not need in negotiating a contract is any additional surprises.

_____________________________________________________________________________________________________

If you or someone you know is thinking of buying or selling property at or near Lake Anna, Virginia please contact Kathleen "Kate" Elim, REALTOR®.

Kate lives at Lake Anna, knows Lake Anna, loves Lake Anna, and specializes in Lake Anna area real estate.

Contact Kate at 540-226-1964 or by e-mail at lakeanna .kate@gmail.com. Be sure to check Kate's Web site http://lakeannacountry.com/.

Welcome Aboard - Photo by Kate Elim

Posted by Kathleen "Kate" Elim LAKE ANNA, VA Real Estate on 03/18/2009 05:04 PM

Comments (10)

Negotiating in the ActiveRain Channel

realtors, lake anna, virginia, negotiating, real estate

Post is included in group: The Lounge at Active Rain
Post is included in group: RE/MAX Active Rain Bloggers
Post is included in group: Realtors®
Post is included in group: Most Active ActiveRain Blogging Agents
Post is included in group: Dedicated Bloggers

10 Comments on Why Split the Difference?

MAR

Just had a buyer's agent suggest that to me last night. xxoo

Each transaction is different, but in each transaction every party needs to feel like they 'win.' Splitting the difference can make each party feel like the compromise is equal--not always the right solution, but it works a fair amount of the time. When the numbers are too far apart, it doesn't matter how you come back!

I like the way you think, Kate! Your point of view is right on. Buyers and sellers DO expect the obvious result, as you mentioned. And it just doesn't always work out that way.

Hi Kate,
Don't "expect" me to do anything -- give me a situation and then I'll make the call.

Hi Susan...Hope whatever happens it works out for you and your sellers.

Kate

Hi Holly...There are certain expectations and, I agree, everyone wants to feel that they have won.

My thought is that buyers and sellers need not feel as though they are obligated to split the difference and that the other party needs to be reassured that they are not being taken advantage of when it doesn't happen that way.

Thanks for your comment.

Kate

Hi Pat...Yes, and it is our responsibility to help them understand that it is not personal.

Thanks.

Kate

Hi Cynthia...About all we can expect is the unexpected. We help our clients when we share that with them.

Thanks for your input.

Kate

I've never felt obligated to split the difference but always alert my client to what the middle is because this may be what the other party is going for. I just keep my clients number in mind and try to get that or better...but I guess that's what we all do!

MAR

Kate, I agree with you. That is a trap and then, like you said, it is expected. Sometimes a strategy is to offer or counter where you might assume might be right below one parties expectations and if it is just close enough the offer might get accepted. Just don't understand why agents are so quick to negotiate our fees? Actually you remind me of a post I have been meaning to write.

Hope you are well Kate!!

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?