I’ve been involved in a lot of negotiations, and read a lot of books on the subject. There is a basic principal of negotiation that is fundamental- that is- below the level of tactics and techniques. In fact, it doesn’t apply to negotiations alone, but to almost every type of human interaction. Here it is:
Other things being equal, when you push or move towards someone, they will have an automatic (and many times unconscious) tendency to pull away.
This can easily be demonstrated with the concept of personal space. The next time you’re speaking with someone, casually and slowly move closer to them. 100% of the time, they will move backwards.
When negotiating price or terms on real estate, if you are over-eager and pushing very hard to get the deal under contract, the Seller will sense this psychologically and begin thinking, either consciously or unconsciously, “I must be giving away the farm! This person seems way to eager.”
Think about this from your own perspective- have you ever sold something, even a smaller personal item, had it immediately sell for 100% of your asking price, and found yourself questioning whether you let it go far too cheaply?
As strange as it sounds, if you make the Seller work for the agreed upon purchase price, even if it is his or her original asking price, they will be more psychologically satisfied with the transaction, and less likely to “shop your contract”, or back out later. Many times, they will even be ultimately happier if you get them down on price a little, because they will then feel more certain that they have done a proper job of negotiating (especially us men, testosterone demands that we exit this arena victorious).
When you make the Seller “work” for the purchase price, you have given him or her a chance to “push”.
An attitude of courteous disinterest while inspecting the property will work wonders on the negotiations later to come. Be polite, be pleasant, and do not beat up the house or talk it down. That is a tactic used by the unskilled negotiator, and it often has the exact opposite of its intended effect. “Wow, this is awful! You really used to live here?”
If you’re only looking at one deal, disinterest will not come easily. When you’re working on several at a time, you know that this house will not make or break your short-term success in real estate. The Seller can sense this objectivity, and your closing rate will increase along with your discount percentages.
Lou Gimbutis, owner of Property Solutions, LLC, www.SoldCarolina.com and www.123EscapeForeclosure.com, has been buying and selling houses full-time since 2004, first in Michigan, then after moving to NC in 2007. He serves as Director of Education for the Metrolina Real Estate Investor’s Association.