Tactics and Strategies Can Make or Break a Home Purchase/Sale
No matter which side of the transaction you’re on, it’s vital to learn to identify various negotiating techniques and their respective antidotes to achieve a win/win real estate transaction.
Negotiating Tactic #1 – Nickel and Diming
As the seller, it’s not necessarily price but net proceeds that you should focus on. Some lower-price sales can actually put more money in your pocket than a higher offer that asks for various terms and conditions that you are not prepared to deliver. As the buyer, remember that everything is give and take; and in tough seller markets, you stand to lose the property to a higher offer if you play the nickel-and-dime game too long. If you really want the property (and can financially afford it) play the cheap card in moderation and give the seller a fair offer.
Negotiating Tactic # 2 – The Stall
This gambit occurs when a party wants time before making a decision (often on a counter offer) and/or wants to sway the direction of the sale.
If you’re working through a real estate agent, he/she will probably try to present the offer to both spouses simultaneously. If you’re working alone as a for-sale-by-owner, make the appointment to present for a time when both spouses are present. If only one of the parties shows up, ask if joint consensus is needed to make the final decision or if he/she is empowered to speak for both parties. Get signatures on all paperwork as soon as possible.
Negotiating Strategy #3 – Higher Authority
One or both of the players must defer to a third party for answers and/or approval. The higher authority could be a lender, an appraiser, a relative, or even a boss.
If you’re making an offer that requires a response, set short time frames for the other party to respond back unless unreasonable (i.e. out of town buyer). Communicating to the buyer that you know he/she is capable of making sound decisions, with or without a third party, will quickly tell you if a higher authority is needed. If so, consider it a necessary roadblock with a time frame that you’ll have to deal with.
Negotiating Strategy #4: – Can’t Make a Decision Buyer/Seller
The “Can’t make a decision” is a decision not to make a decision.
Ask the particular party to isolate their concerns about the offer. While you need to build the party’s desire to accept the offer, don’t forget that you have a powerful negotiating tool – revocation of the offer before acceptance. While this may seem like a dire measure, there’s no harm in communicating to the party that you understand this option – This may be just the nudge needed to precipitate a decision.
Negotiating Strategy #5: – Reduce-it-to-the-ridiculous
The idea is to make something you’re negotiating for seem so insignificant, that the other party would appear a fool to say no!
As the seller, turn the table and show the ridiculousness of a buyers comments without insulting them – i.e. equate a sum of money into cost in cents per day to buy the house.
The bottom line is that neither buyer nor seller gets to win all of the marbles; contrarily, no one should lose them all. Identifying negotiating gambits and more importantly, their antidotes, can help you structure a win/win transaction where all parties feel as though they’ve compromised, but won. Good luck with productive and fair negotiating!