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The Art of Negotiation

Updated: Aug 8

As professional Real Estate Brokers we negotiate when on both the buying and the selling side of transactions. Here is what we will do for you!


1. Basic Tenants of Negotiation

  • Never take an adversarial or even aggressive posture with other realtors, buyers or sellers. Be nice!

  • Respond quickly.

  • Be the solution not the problem ---resolve real estate needs.

  • Don’t be afraid to talk – email and texts are convenient but hearing a persons voice can make all the difference.

  • Remember - Fiduciary Responsibility as Brokers we have a fiduciary responsibility with every aspect of a transaction. When negotiating, every piece of information should be thoughtfully considered to improve the position of our client in the transaction.

  • The "art of negotiation" is not just a simple isolated initial exchange, but rather a continuing effort throughout the transaction.

  • Every action during the entire transaction beginning with submittal of offer to close of escrow is part of the negotiation.

  • Sometimes it easy to think that once an “Offer is Accepted” that the deal is done. Don’t give up your position, don’t make unnecessary concessions, make sure there is give and take or one side is going to become defensive or offended.

2. Structure the Offer for Acceptance

  • When representing a Buyer one of the first things we do when presenting an offer is to introduce our buyer by way of a letter or paragraph about the buyer – being relatable, and making a personal connection.

  • We discuss with our buyer the best way to position the offer to increase the likelihood of the Seller’s acceptance. Each offer is unique but there are some common similarities...

  • If you want to pay the lowest price for piece of property, you then have to be sure that all the other components to your offer, other than price, are as attractive as possible.

  • If you want the seller to accept a contingent offer then another part of the offer needs to be more appealing to the seller.

  • Remember that while price is very important to the Seller, but there are other aspects of the deal that may be just as important.

  • The Seller only wants to go through the escrow process ONE TIME, so if all the components of your offer say “I can CLOSE”, your lower-price offer may be preferable to a higher that offer that says “I am not so sure this is the right house or I may be a pain and demanding and may NOT close escrow”.

3. The Home Inspection is also a Frequent Negotiation Tool

  • The Buyer should be reasonable when negotiating needed repairs. This is a very easy place in the negotiations that has the potential to be very offensive to a seller and becomes very personable.

  • Some Buyers consider the repair addendum another negotiating tool for the price of the home “after the fact” so we are careful here to explain to our buyers that a seller can say no to all the “repairs” called out on the Professional Inspection, every home being sold can be sold as is even without stating it from the beginning.

  • By the time some Sellers get to this point in the transaction, all they usually want the home to close escrow. They are tired of the process and are often willing to reduce the price or make some concessions just to keep things moving along.

  • A Seller may want to get a home inspection before they even list the property, and then fix the items discovered in the inspection. This approach completely removes the home inspection as a bargaining tool from the buyer’s side of the transaction.

  • Even if you don’t want to invest the money to repair the items, you can still give the list of needed repairs to a potential buyer so before they offer, they are taking into account the repairs that are needed.

4. Don't Insult the Other Side of Your Transaction

  • There are many different ways that you can put a seller or buyer into a defensive position. Not a good idea.

  • This is perhaps the first place many negotiations fail.

  • There is an art to creating an offer to buy a home at the best price. What happens if you come in with a really low offer, or ask for everything including their expensive art work?

  • Don’t force the seller’s sense of pride to over-rule their desire to sell the home.

  • Once you have put the seller in this position, it is difficult to correct it.

  • Very few buyers are able to correct the mistake of insulting the seller.

  • Pride is a really big deal.

5. Negotiate with DATA, not Opinion

  • Identify a very good listing/asking price that is justified by market comparables,

  • Use the market data to prepare and then support your offer

  • Showing a seller market data is way more persuasive than simply saying “I feel like you are over-priced”

  • If the Buyer-agent produces data that supports their client’s offer, many times the seller’s agent will be swayed by the data and will recommend that their seller-client accept the offer.

  • The mirror image of this (Seller prices high to allow room to negotiate) has the same effect of discouraging the Buyer and forcing a lost negotiation.

  • A good listing agent will help the Seller create a package that shows the value of the home using market data. Again, this is way more persuasive than opinion.

6. Timing is an important Part of a Good Negotiation

  • How long has it been on the Market?

  • How quickly can I get it closed?

  • What are the seller’s time lines?

7. Counter Offers

  • A Seller can be offended by a low-ball offer and refuse to make a counter offer.

  • It is “almost” always worth a shot to counter back to a buyer with a reasonable price, even if they submitted a low offer.

  • Sellers who can disengage their emotions about their home and view the sale as a business transaction, tend to do better than sellers making emotional decisions during the sale.

  • I have even seen situations when one of the partners disagreed, but went along with it simply to support their partner.

  • So when the counter offer came back from the seller, the partner who disagreed with the low offer simply stated "Now it is my turn" and submitted a legitimate offer.

  • You just never know. I do not recommend endless back and forth offers if there is no significant movement towards common ground, but I do suggest that in most cases, at least one volley back across the fence is worth the effort.

8. Offer Incentives

  • There are many different kinds of incentives that a seller can offer, or a buyer can request in the transaction, and they are all part of the negotiation.

  • Common incentives might include: " Reduce the price / Pay points for the buyer / Help with the down-payment / Help with closing cost / Offering a home warranty / Pay future fees

WE WORK COME UP WITH VIABLE SOLUTIONS AND WORK AT NOT CREATING PROBLEMS.

© 2020 Powell Team a division of Fred Real Estate Group

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