Successful real estate negotiation does not necessarily involve outsmarting the other party. But it does involve careful planning to fully understand the negotiating situation.
My favorite motto is "Proper preparation prevents poor performance." This statement is especially true if you want to be a successful real estate negotiator.
Last week, we discussed the importance of using your superior knowledge to formulate a negotiation game plan, understanding the importance of time in negotiation, gaining power by learning everything you can about the other party while revealing as little information about your situation as possible and understanding the "higher authority" negotiation strategy.
This week we will conclude our negotiation discussion with more strategies to use if you want to be a successful real estate negotiator.
Use the "he who cares least, wins" strategy. Buying or selling a home is a highly emotional decision. However, when you want to successfully negotiate the best possible price and terms, from your viewpoint it is important to be unemotional. Pretend you don't really care if you buy the property.
If you are the buyer, the world won't come to an end if you don't purchase the home you like best. If you are the seller, you don't absolutely have to receive the top price and all the sales terms you would like to get.
Top negotiators realize that if they are to be successful, they must adopt, at least on the outside, an attitude of not caring. If it becomes too obvious that you must either buy or sell quickly, the other party will soon sense your situation and try to take advantage of you.
For example, negotiations for large commercial properties often go on for months if neither party is highly motivated. However, when the seller must sell quickly or the buyer has a deadline, then one party will get the best of the other.
Watch out for the non-stop negotiation strategy. If you are a property seller, beware of buyers who never stop negotiating.
Even after a firm written contract is signed by both buyer and seller, some buyers will continue hammering away to negotiate a better deal. They usually do this by repeatedly coming back to the property to inspect and reinspect.
Often they do this for various alleged reasons, such as to measure the rooms for furniture. But the truth is, every time they come back they are looking for defects so they can renegotiate the price or other terms.
The truly professional non-stop negotiators wait until just before the scheduled closing date when the seller has already made plans to vacate and other prospective buyers have lost interest in the property.
This is when the non-stop negotiators spring their last-minute demands on the seller, such as insisting the seller leave the appliances or the buyer won't complete the purchase as agreed. Although the seller knows the buyer has no right to the appliances, often the seller will agree just to keep the sale from falling apart.
The best way to handle the non-stop negotiator is to be tough. Make sure you have a firm, well-written, legally binding real estate sales contract. Unless you see some advantage to changing the terms, stick by the original agreement.
Tactfully remind the other party, perhaps through your attorney, that you expect to live up to your agreement and you expect the other party to do so too.
The good guy-bad guy strategy. You may occasionally encounter this negotiation method in which one party on the opposite side acts difficult and unpleasant while the other person acts extremely pleasant.
Husbands and wives often play these roles like Hollywood movie stars. The husband is usually the tough guy, demanding an unreasonable price or terms. Then the wife, when she sees he won't get his way, suggests a compromise at more reasonable terms.
To counteract this strategy, just listen to the other parties, nod your head to show understanding but not necessarily agreement, and let the talkers wear themselves out. Even if it takes hours, let the other side run out of energy until they agree with your viewpoint. The best time to negotiate with these people is in the evening or on a weekend, when you have plenty of time to wait them out.
The auction strategy. If you have ever been to an auction, you know the often uncontrollable fever that affects some buyers who absolutely must have the item being auctioned. The same thing can happen in real estate, especially in a strong seller's market when there are fewer properties for sale than there are qualified buyers.
When buyers are abundant, property sellers can afford to adopt a "he who cares least, wins" attitude. This happened to me recently. The seller rejected my purchase offer, implied there was another offer coming in from another buyer, and invited me to make a better bid. But I called his bluff by not raising my bid. I doubt that there was another offer because the property is still for sale.
As a buyer, when I know there is another buyer I drop out, because the only winner in a bidding contest is the seller.