Negotiating a Sale
(A continuation of How
to Sell a House)
By Steve Gillman - 2006
Negotiating a sale of a home could be a book-length subject
on its own, but I'll touch on it briefly here. This is another
one of those reasons why it can sometimes be a mistake to sell
your home on your own. A good agent, after all, has some good
negotiating skills learned from experience. If you sell it yourself,
use the following tips, but you may also want to consider reading
a good book on the subject.
Some Basic Negotiating Tips and Tricks
Try to Find Win-Win Solutions
Always look for win-win solutions, and present them as such.
When I was selling real estate, I noticed that sellers often
assumed that the buyers just wanted the lowest price. While this
is often true, buyers also want an easy transaction. A seller
who offers this can get a higher price, and both sides will win.
The key to good win-win solutions is to find non-conflicting
needs or wants. For example, if the buyer needs to buy with less
cash, and you want a good price, you could suggest that the price
be raised, while you pay more of the closing costs. Both sides
win.
If you are moving to a smaller place, and the buyer needs
to furnish his new home using limited cash, you have a perfect
win-win possibility. The seller can come up $4,000 on the offer,
and you can leave some of the furniture, and perhaps the large
refrigerator and washer and dryer. The larger mortgage loan adds
only $25 per month to the buyers payment while preserving cash,
and you don't have to try to fit all that stuff into your new
place.
Use the Limited Authority Ploy
Limited authority may be a reality, or may just be a tactic
used when negotiating a sale. In real estate it is common to
say something like "I'm not sure if I can do that. I have
to okay it with my wife." That may or may not be true, but
it is a way of putting off the issue, or possibly getting the
other side to drop it, or making your rejection of the idea less
personal ("Sorry, my wife said no").
When it's used against you, a subtle ego-attack may reveal
it to be just a tactical move. Try something like, "If you
can't make that decision, who has the authority to decide? Should
I wait and talk to someone else?" Sometimes he'll feel inclined
to "prove" he has some authority, and will make the
decision after all.
When you use the tactic yourself, try it in a way that encourages
the other side to concede something. You might say, for example,
"I don't know if my wife would be okay with that or not.
I'll tell you what; If we can get the price up to $145,000, I
can probably get her to agree."
If the buyer then tries the ego-attack on you, just smile
and say, "I'm sorry, my wife insists that I do the negotiating,
but she won't let me make the final decision."
Exclude Competition
If you could exclude other sellers, you would have a better
chance of getting what you want from that buyer, right? Start
by never mentioning other homes. The buyer may mention them,
so have a response ready. "I know there are other homes
that might work for you, but will those sellers pay your closing
costs?" Find ways to set yourself apart from the competition.
Set Aside Problems for Later
It is often best to set it aside tough issues and come back
to them later. This is partly because of the psychology of time-investment.
Spend time nailing down the other points, and the buyer won't
want to throw away the deal as easily. This means that when you
finally return to the tough issue, he may be more willing to
give you what you want.
Just say something like, "Let's set this aside for the
moment, and come back to it later. There are other things I think
we can easily agree on, so let's get those worked out first."
Usually the suggestion will be accepted. It may even be a relief
to all involved to let that issue drop for now. Then, with time
and more trust-building, you can return to it in a stronger position.
Build Trust
Building trust can help keep things going smoothly when you
are negotiating a sale. It can also help you get what you want
in circumstances where the other side might doubt your intentions.
So how do you build trust?
Telling the truth is a start, of course, but you can also
approach this in a more active way. Make it a point to promise
things that you can easily follow through on. This could be as
simple as saying, "I'll get that copy of the survey to you
by tomorrow morning." Let the buyer know what you'll do,
and then do it. Just delivering the survey without first saying
you'll do it won't be as effective for building trust. Find things
to promise, and be sure to follow through.
Compromise
The compromise is one of the essential elements of negotiation.
Both sides expect to have to compromise on many points, and it
is the easiest way to settle a difference. How you arrive at
that compromise, though, is crucial.
For example, it is common for someone to say something like,
"Look, we're only $6000 apart now. You want to $204,000,
and I want $210,000. Why not split the difference and make it
$207,000?" Of course, if you had only come down to $216,000
then "splitting the difference," would mean a price
of only $210,000. That's why it's important what you do before
the compromise.
Extreme initial positions can help here. You can let the buyer
come up $2,000 at a time from his first offer, while you drop
your price by only $500 with each counter offer. That way you'll
get a higher price when the compromise solution is suggested.
This can be too obvious though, so you may want to also negotiate
for other points that are of little concern to you, just so you
have something to "throw back in the pot" when it's
time for a compromise. In the example above, you might have previously
dismissed leaving the washer and dryer, just so when the buyer
hesitates over the proposed compromise, you can say, "Look,
why don't you take the washer and dryer too, and we can sign
this right now."
Let the Seller Be the Smart One
Make an offer their idea. You might say something like, "Are
you saying you'd like a later closing, and less earnest money?
Well let's do it your way, then. I just need..." and then
you ask for what you need to get for "their" offer
to work.
We continue our look at negotiating a sale of a home with
a basic negotiation checklist and suggestions on what to include
in the purchase agreement...
The book continues here: Negotiating
a Home Sale - What to include in the contract.
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