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The Art of Negotiation


1. Basic tenants of Negotiation


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

· It is really important to never take an adversarial or even aggressive posture with other realtors, buyers or sellers. It’s so much better to be nice! It’s not always easy but it is always better. However, this does not mean we are not firm in our client’s position, especially when that position is of utmost conviction of our client.

· Timing is so important - we respond quickly.. people are anxious for resolutions and positive timeliness gets results.

· Be the solution not the problem --- we seek to understand and resolve concerns.

· We are not afraid to talk – email and texts are convenient but hearing a person’s voice can make all the difference.

· As Real Estate Brokers we have a Fiduciary Responsibility for every aspect of a transaction. When negotiating, every piece of information is thoughtfully considered in order to improve the position of our client in 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

· 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 every other aspect of the offer needs to be more appealing to the seller.

· Remember that while price is very important to the Seller, there are other points 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 the 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

· A 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

· This is perhaps the first place many negotiations fail. There are many different ways that you can put a seller or buyer into a defensive position. Not a good idea.

· There is definitely an art to creating an offer to purchase a home at the best price. You may need to think about what happens if you come in with a really low offer?... could the seller just get insulted and refuse to respond.. or what if you ask for everything including their expensive art work?

· It is not a good idea to force the seller’s sense of pride and over-rule their desire to sell the home to you. An 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 asking price that is justified by market comparisons,

· Putting together a CMA helps our Buyers & Sellers know the data to support the price they are listing or buying for. This is a much stronger position than.. “I feel like it needs to sell for…..” Plus it is a much better position to allow room for negotiation. You have the data and evidence to base your asking price on.

· We create a package that shows the value of the home using market data, and gives you information about the difference between a CMA and an appriasal

It takes a good amount of research, but when we have that data put together we are confident that any potential offer should be fairly close to the recommended price.


6. Timing is an important Part of a Good Negotiation

· We always check how long has it been on the Market?

· How quickly can it be closed?

· What are, our client’s time lines?


7. Counter Offer Offers

· A Seller can be offended by a low-ball offer and refuse to make a counter offer if it is way too low. Especially if there isn’t any supporting data.

· But just the same we think it is “almost” always worth a shot to counter back to a buyer with a reasonable price, even if they submitted a low offer.

· Like we’ve said before... Disengage emotions …. People who can view the sale as a business transaction, tend to do better than sellers/buyers making emotional decisions.

· I have even seen situations when partners/spouses disagree, and maybe don’t really like the house or the offering price but go along with their partner to get along.

· But if a counter offer comes back then they are more open to speak up about what they really thought previously.

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


8. Offer Incentives

· There are many different kinds of incentives that we can suggest a seller can offer, or a buyer write in an offer. That can enhance the transaction either way.

· Common Seller incentives might include: " Reduce the price / Pay points for the buyer / Help with closing cost / Offering a home warranty / Pay future fees – like taxes or HOA fees for the year. Sometimes incentives can even include personal items like appliances or furnishings.

· A Buyer can offer incentives to help induce the Seller to accept even if it is not a full price offer, such as .. Offer rent back to the Seller if they need more time to move out or a sooner close date if they are in a hurry, or perhaps only ask for safety issue corrections on repairs.


WE WORK TO COME UP WITH VIABLE SOLUTIONS AND NOT DRAMA OR PROBLEMS.