Negotiations involve two key motivational factors: your desire to complete the transaction balanced against the financial impact. Both you and your counterpart on the other side of the negotiation want to complete the sale. Also, both you and your counterpart have an acceptable price point already in mind. The key to a successful negotiation is to keep both parties engaged long enough to find the middle ground between a buyer’s upper limit and a seller’s lower limit.
Emotions and assumptions are the most common reason why negotiations fall apart. Given enough time, a motivated buyer and a motivated seller can usually come to an acceptable pricepoint. Here are a couple tips to help you give yourself the best chance to realize your goal:
Recognize and Match The Negotiating Style of Your Counterpart
Some people love to negotiate. Others like to set a price and hold steady. A person’s negotiating style depends on their personality, culture, experiences, and profession. Both methods are an effective way to come to an agreement as long as both parties conform to one style or the other. When used against each other, however, a deal is much less likely to occur. The key is not to force your style on your counterpart, but instead to understand their style and match it.
Usually, your counterpart’s first bid will let you know their style, but what do you do if you’re the one making the offer? Instead of going in blind, have your agent find out the negotiating style of your counterpart from their agent. Once their negotiating style is known, set your target price and work with your agent to formulate an appropriate opening bid.
No one likes to deviate from their preferred negotiating style. Just remember, using a negotiating style that isn’t natural can be uncomfortable, but the improved results are worth a little discomfort.
Never Reject an Offer
Rejection leaves you little room to accomplish your goals. Rejections lead to hurt feelings and a sense of finality. Your counterpart may have eventually come to your price point, but with a rejection you’ll never know for sure.
If you’re selling your home, there is an additional bonus to maintaining negotiations. An ideal situation for a seller is to have multiple buyers bidding on your home. When this situation occurs, your buyers are no longer fighting against you . . . they’re fighting against each other (and essentially themselves in the process). If you have a quality offer, by all means take it. If you don’t, keep the negotiation alive and maybe you’ll get lucky and stumble into a multiple offer situation.
Find Common Ground
It is very common for both you and your counterpart to want more than each of you is willing to give. If it looks like you’re coming to an impasse, open up a dialogue with your counterpart and see if you can find some common ground. First, list the issues that are still undecided. Second, have both parties divide the list into two categories: needs and wants. Third, compare lists and iron out the details. The goal is for you and your counterpart to come to a mutually beneficial agreement, where each party gets what they truly need and sacrifices items they merely want. If you find an issue that both parties rate as a need, see what you can do to find a middle ground.
Talk From Your Wallet, Not From Your Heart
Your emotions will betray you. If you let your emotions take control of a negotiation, you’ll more than likely sabotage your own chances of success. The only things that should matter in a Real Estate negotiation are money, convenience, and the likelihood of closing. Additionally, every item in a Real Estate negotiation (including convenience and the likelihood of closing) can be broken down to a monetary figure.
When reviewing an offer from your counterpart, make a list of the items you’re unhappy with and work with your agent to attach a monetary value to those items. In your mind, adjust the purchase price by that value and you’ll know the overall financial impact of the offer. If you plan to write a counter offer, base it on your financial breakdown, not on how you feel at the time.
Whether you’re buying or selling, Real Estate transactions are always uncomfortable. Expect to be inconvenienced, put out, and offended at some point. When these situations occur, you will have the chance to become your own worst enemy. Don’t let this happen. Stay cool and keep your eyes focused on the endgame.
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