Great Real Estate Negotiators Are Made, Not Born
by Dian Hymer, Inman News
The mere mention of negotiation makes some people nervous. They may not like conflict. Or they feel at a disadvantage because they lack experience. Negotiation can be seen as bickering, something to be avoided if at all possible. A good negotiator is often seen as a shifty manipulator.
Like it or not, home buying and selling involves negotiation. Your first negotiations are with your real estate agent. If you’re selling, you might negotiate a number of variables with your agent such as how high the list price will be, how long the listing will be in effect, or the specifics of the marketing program.
In fact, we all negotiate every day of our lives, whether we consciously realize it or not. You might negotiate who makes dinner, or how late your teenaged son can stay out at night.
Negotiation is not a bad thing. It’s one of the ways we interact with others in order to realize our aims. Think of negotiation as a tool that you use in order to reach your goal, which in this case is buying or selling a home.
HOUSE HUNTING TIP
Perhaps the most overwhelming reason why some people shy away from negotiation is that they fear that the other party will take advantage of them. In order to keep this from happening, make sure that you are clear about your goals. What is the maximum price you will pay if you’re a buyer, or the minimum price you will accept if you’re a seller? To be successful at a negotiation, you need to set boundaries for yourself. It may help to write your objectives down and refer to them during a negotiation to keep form being pulled off track.
Most home buyers and sellers hire a real estate agent, or attorney, to negotiate on their behalf. Some real estate professionals are more adept at bringing buyers and sellers together than others. So, be sure to select your agent or attorney carefully. Check references if you haven’t had prior first hand experience with the person.
One of the most important negotiating tools that you can use to your advantage is information.Gather as much information about the other party as possible, while revealing as little as possible about your own situation. For example, if you know that the seller needs to start work across country in a matter of weeks, offering a short close might be enticing. In fact, you might even get a break on the price.
Although revealing too much about yourself can compromise your negotiating position, you do want to let the seller know that you are financially qualified.
There are three key elements of any home purchase contract: Price, terms (such as the closing date) and the buyer’s financial qualification. Strong financials, as evidenced by a preapproval letter from your lender, can make up for weaker terms and a lower
price.
Some buyers try to avoid negotiation by using the take-it-or-leave-it approach. This often leads to a dead end. Negotiation involves a process of give and take. It’s wise to hold back a bargaining chip or two so that you have something more to offer if
the seller counters your offer. An exception is if you’re making an offer in competition with other buyers. In this case, you’re wise to make your first offer your best offer. You may not have a second chance.
THE CLOSING
Try not to think of negotiation as combat. Although you want to buy at the lowest price possible, and the seller wants the highest price he can get, you are both working toward a common goal: the consummation of a home sale.
Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.
Copyright 2005 Dian Hymer
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