Real Estate NewsNegotiating Tactics Can Make Or Break The Home Sale
In a perfect world, real estate closings would occur over night, sellers would keep every promise made, and both buyers and sellers would negotiate openly and fairly.
Unfortunately, welcome to the real world where buyers whittle at the purchase price, closings are postponed, and both sets of players use negotiating gambits to win advantage.
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: - This gambit includes variations on "we can"t go any higher because we"re short on down payment and closing money" or "we want to keep our payment low".
Antidotes: 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 you to pay heavy closing costs.
As the buyer, remember that everything is give and take; and in today"s 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 - Nibbling/whittling: This technique is generally used once negotiations are finalized (although this gambit can occur within the body of negotiations as well.) The buyer might tell the seller, "I"m sure you mentioned that the microwave was included in the purchase. Otherwise, I wouldn"t have made a full-price offer." In this case, the buyer is "nibbling away" at what has already been negotiated. When a seller "nibbles" it may appear in the form of selective memory of verbal promises that were made prior to reducing the contract to writing.
Antidotes: Make sure everything is spelled out in the purchase agreement and that no verbal offers/counteroffers are made. If one party starts nibbling at the other, that remind the nibbler that adding items to the purchase agreement would re-open negotiations. That could spell ultimate loss, not gain for the nibbler---perhaps even losing out on the purchase since a new offer creates a counter-offer---one that the other party is under no obligation to accept.
Negotiating Tactic #3 - good guy/bad buy: 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. One person in the buyer or seller team is the good guy; the other is the bad guy. They are very rarely in the same room or location together as this can lessen their impact as a team. For example, the seller/husband might say to the buyers, "I don"t know if my wife would come down in the price. She"s pretty set in her ways. I"ll ask her and get back to you." He"d later call the buyer back to announce, "I"m sorry, my wife won"t budge on the price; but we"re willing to include the refrigerator for a full-price offer." He"s the good guy for asking (and lobbying for the concession). She is the powerful one at a distance making the decision.
Antidotes: If you"re working through a real estate agent, he/she will probably try to present the offer to both sides of the team simultaneously. If you"re working alone as a for-sale-by-owner, make the appointment to present for a time when both members of the team are present. If only one of the parties shows up, ask if joint consensus is needed to make the final decision or if s/he is empowered to speak for both parties. Get signatures on all paperwork as soon as possible.
In part II of this article, we"ll visit the negotiating gambits of higher authority, the stall and reduce-it-to-the-ridiculous. Until then, happy negotiating. Part II: Negotiating Gambits Can Make or Break the Home Sale - Part II
Also See:
Negotiating To Yes
Multiple Offers: How Can You Compete?
Buyers: You Have the Right to Remain Silent
The Bottom-Line on Contract Negotiations