You Need a Realistic Target in Mind When Negotiating, Otherwise You Are Just Wasting Your Time
I'm pretty bent this week about the lack of negotiating skills I ran into this week when an offer came in on one of my Northern Virginia listings. Clearly, a real estate transaction can't happen if you can't find middle ground between a Buyer and a Seller. And in this case, while my Seller gave some clues as to what was important to him in his counters to the Buyer, the Buyer had blinders on. It was his way or the highway. And after two counter offers, the Buyers third and final counter was actually WORSE than his second counter. Perhaps that's just the final insult to a Seller who didn't bend over backwards to accomodate the outlandish requests by this Buyer. It was certainly a move out of left field.
When entering into a real estate purchase negotiation, it's important to understand that while each side in the transaction has their best case scenarios, they usually can't exist and actually overlap with the other side's best interests. So negotiations become an art of finding that middle ground between Buyers and Sellers. And in just about every scenario, you can find that middle ground if you are realistic in terms of market value and what's customary for the market. Both of those things are fluid and change with demand.
T
he reason for this failed negotiation was the Buyer mistakenly thought that he was in a Buyer's market where you can ask for a truckload of closing costs, a low sales price and still have more demands. The reality of the current marketplace is that Northern Virginia Sellers have the upper hand. Closing cost assistance has come down significantly. In fact, it's becoming more and more common as this Northern Virginia Seller's market persists, to see Buyers paying their own way and paying market value for homes. And market value for the area has been rising. So the Buyer paid no mind to what the market comps or market stats were telling him. I would dare say, his agent probably never ran them. He stuck with his lowball offer and was proud of it. Unfortunately, he doesn't have a house and probably won't be getting one anytime soon.
Whenever I advise my Buyer Clients on what to offer on a home, we don't just look at list price. We look at the comparable sales and figure out what an expected sales price would be. That becomes the target. From there, Buyers will generally ask for more than they expect to get, realizing that once they hit that target, or come in below it, they've done very well.
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