Negotiating a real estate transaction is not for the faint of heart. The amount of money on the line makes these transactions serious endeavors, and you want to be sure that you are negotiating them well. Yet it is possible to be a smart negotiator with a little planning ahead of the process. If you’re entering negotiations for a real estate transaction, keep these tips in mind.
1. Never “Speak” First
If possible, don’t be the first one to make an offer. Now, when you are buying a home, you have to put out an offer first, but once the negotiations start, try to wait for the other party to define their position. Why does this work? Because it allows you to see where the other party wants to be, and bring the negotiations even closer to what you want.
Here is an example. If your seller wants to offer a $1,000 concession based on your offer, but you were holding out for $2,000, wait to see what the seller wants to offer. When they offer $1,000, you can counter with $3,000, making the mid-point between your two positions your original desire of $2,000. If you come right out and say $2,000, and the seller also says $1,000, the mid point becomes $1,500, which is less than you wanted.
2. Design an Offer for a Counteroffer
Many real estate negotiations start too close to the buyer’s maximum. This creates a difficult position for the buyer, because the seller is going to counter the offer. Soon the buyer is stuck trying to decide whether to take the counter, even though it is more than they wanted to spend, or walk away. Instead, start the initial offer low so you can move up and make the seller feel that they got a good deal, all while keeping your final price within your budget.
3. Meet in Person if Possible
If it’s possible, meet with the other party in person. Why? People are naturally inclined to do business with others they have met and trust. Meeting in person will help create that personal connection that can sway the negotiations in your favor.
4. Use Language That Puts the Other Party in Control
Throughout the negotiations, you need to maintain control, but in a way that makes the other party feel they are in control. Using language like, “You’ll probably say no, but . . .” actually increase the likelihood of a “yes” answer, because it makes the other party feel like they are ultimately in control.
5. Create Win/Win Scenarios
Rather than viewing the negotiations like a battle, create win/win scenarios that help both the buyer and the seller. Framing negotiation statements so that they show a benefit for both parties will make the process go much more smoothly and increase the chances of a positive outcome.
Negotiations are tricky, but the right strategies can make them go well. Whether you are a buyer, seller, or agent, these tips will help you come out on top in the real estate negotiations process, all while helping the other party feel positive about the experience as well.