Sequim real estate is very precious, and when it comes to negotiating, whether you are buying or selling, it's a matter of real money, your money. I see poor negotiating at least once a month and sometimes more often. Negotiate your sale or purchase poorly, and I can guarantee you will lose $1,000's of dollars, and maybe even $10,000's.
Treatises are written on the subject of negotiating, and if you search Amazon.com, you get 130,000 results. Perhaps a real life example of one aspect of poor negotiating will make my point.
A young couple searched for a lot for their new home. They were very excited about building their dream home. They looked at 100's of house plans, and finally narrowed down their search to one beautiful plan. They began searching for the perfect lot for their little dream home, and they found a couple of possibilities. Since the market slowed down, the inventory of lots available gave this couple plenty of choices. It was a buyer's market.
This couple was young, but they were very careful about making wise decisions. They were not rash, and they compared lots and prices. They found a lot that would be ideal, and they made an offer of $159,000. The listed price of the lot was $189,000.
Here's where the error in negotiating begins. The buyer's agent called the seller's agent to let her know an offer will be coming. That kind of phone call has negligable value, and in this case turned sour for the buyer's agent. The selling agent began to question the buyer's agent about how much the buyer would pay and what they intend to do, yadda yadda yadda. The buyer's agent made an error in judgment and shared some of these details, thereby breaching his duties of confidentiality to his client, but worse than that, he unintentionally compromised his client's negotiating power.
The listing agent insisted that her clients would not accept less than $189,000. She was posturing, but that kind of posturing has no negotiating value. The buyer's agent told her that the buyers really want the lot and are planning on making a full price offer. Whoops! Now both agents have made serious negotiating mistakes and have begun the process of compromising their clients' positions.
When the buyers sat down to make an offer, they decided not to make a full price offer. They wrote it up for $159,000. Of course, the listing agent was surprised and called the buyer's agent to task for the low offer. More wasted conversations, justifications, backing up, and none of it was beneficial to either client. These kinds of conversations only compromise the clients.
The sellers, who purchased the little development as an investment, countered at $175,000. So much for firm prices, and credibility was eroding here for the listing agent. The buyers struggled with what to do, although they knew darn well they were not going to pay $175,000. They felt that every additional dollar they paid for the land would be a dollar they would not be able to put into their new home. The other lot they were looking at was less money and was also a nice lot.
The buyers decided to counter the counter at $162,500, and the seller's countered that at $169,000. The buyers walked. They had other lots to choose from, and for less money. That meant more house to them.
The seller's made a tragic mistake here and lost the sale of a lot in a slow market, and all over $6,500. But the real tragedy is what this may cost the sellers in the long run. It may actually cost the sellers $100,000. Since there are many lots in this new development and none have yet sold, killing an opportunity to get a home built in the development essentially killed the synergy of selling several more lots in the following months. People are twice as likely to purchase a lot in a development if there is a nice home being built as opposed to an empty development with weeds and dirt on vacant lots. The sellers may go many months now without a sale, and if the market turns down any further, or stays stale, they might not sell anything for another year. What a tragedy this one lost sale could become for the entire development.
Many sellers, even investors who consider themselves astute investors, and many real estate agents, make such mistakes all the time, costing them or their clients thousands of dollars. Negotiating is not for the inexperienced, unless you want to gamble, or risk losing hard earned money. Negotiating is for the experienced professional. When you buy, or when you sell, I recommend you have a seasoned professional in your corner. Believe me, he or she will make you far more money than their small commission.
Last thought here, and it may not be a pleasant one for some of my readers. The reason many people lose money when they buy and sell is because they are not humble, but arrogant. I know, that's not a pleasant thing to say. That's not a warm fuzzy, but it is the truth. I have no intention of offending anyone. It would be easier for me not to even write this, but it is true, and it could cost you $1,000's. Assuming you know something that you may not actually know is a very dangerous game. It's called pride. Pride can cost you a small fortune. I recommend you dispense with it. Much later you will be glad you did.