Negotiation is about more than giving and taking. It's the skill of crafting an agreement to everyone's satisfaction. Here's how.
- Get your home in first class condition so the buyer cannot bring-up any significant objections. A home warranty goes a long way to overcoming these objections. (see article on home warranties)
- Learn (if possible) the buyer’s motivations and pressures. DON’T DISCLOSE YOUR OWN MOTIVATIONS OR PRESSURES. “We’ll be looking to purchase a bigger/smaller property after we sell our current property.”
- Have your facts at hand about any recent, local sales to support your asking price. We recommend before you start the home selling process that you obtain an appraisal and or comparables. So If you have had your house appraised, have the appraisal available. In a strong or rising market, do not be uncomfortable in pricing your home slightly above the appraisal. In a weak market, peg your asking price at the appraisal and prepare all the items you feel that the appraiser missed. Use the appraisal and sell the features and benefits of your house.
- Practice your presentation and be ready to handle the typical “buyer’s tactics” which are discussed below.
- In 80% of the cases, you will be better prepared than the buyer’s agent who won’t have done his homework and who won’t have a clue about your property. He will try to deal in weak generalities. You will have specifics.
- Be prepared to walk away; when selling your home you must be prepared to turn down unacceptable offers or situations. REMEMBER: “He who cares least wins.”
- Monitor the latest mortgage rates and lending news at our Mortgage page, with fresh content delivered daily by Bankrate. Why? Because the more you understand about the lending conditions facing your buyer, the better you will understand what factors your buyer can change, and what factors you both must work around.
Buyers’ Negotiating Tactics
Here are some of the buyers’ tactics, for which you should prepare. These can drive you crazy when you are trying to offer a fair deal. Have a sense of humor about things, smile and speak slowly.
The more common tactics, which normally occur after a home purchase agreement has been reached:
- The “higher authority” negotiator. This tactic uses a third party who will need to see the home or review the contract before the sale is completed. “My parents who are giving us the down payment.” “My attorney needs to review the contract.” These are last ditch attempts to grind down the price. An effective way to counter this tactic is to ask (before setting a negotiations appointment), “Is there anyone else whom you would want to be here when we finalize all details?”
- Nibblers – the non-stop negotiators. Sometimes referred to as “nickel-diming”. Don’t pull out your hair. The best way to avoid nibblers is to document all items and details thoroughly that you previously agreed upon. Make sure that everything to be included in the sale is clearly documented. “A deal is a deal.” If they want to change things, it creates a counter-offer, which you have no obligation to accept . . . they can lose their purchase. They should be informed that their counter-offer must be in writing and that you may or may not accept it. Often this will stop the nibbling. Other tactics you can use are SILENCE and The WINCE discussed below.
- Good Guy / Bad Guy. This is a similar situation to the “higher authority” tactic. In order for this tactic to work, the good/bad team must be in different places so that you don’t have access to the bad guy who has all the objections. The resolution of this situation is to set an appointment, which is convenient for the all parties to attend. If a joint consensus is necessary, don’t negotiate unless everyone is present.
- Wouldjatake. This is normally a sudden statement blurted out by a buyer – often a “trial close” designed to catch you somewhat by surprise and get your confirmation on a deal favorable to the buyer. The best response to a “wouldjatake” is: “I’ll look at any offer that you present me in writing.” This response diffuses the situation immediately and allows you time to consider things.
- The Trial Balloon -- Trial balloons are questions designed to assess your position without giving any clues about your counterpart’s position. Essentially, these questions allow them to gain information without making a commitment. When you're on the receiving end of a trial balloon question, you may feel compelled to answer it thoroughly. Resist and counter with another question. For example, if someone asks, "Would you consider financing the house yourself?" respond, "Well, if I did, what would your offer be?" The expected response should be a higher offer from the buyer.
Here are some thoughts to keep in mind, which may assist you in smoothing the negotiation process:
- Start with a Fair Price. And you immediately remove a significant point of contention. Any lower counter-offer thereafter must be reasonable and fair.
- Respect the Buyer’s Important Issues. You may be able to strengthen your own positioning by knowing and respecting items of particular importance to the buyer.
- Be Prepared to Compromise. If you try to win every point, you could sour the deal. Both parties should walk away “relatively” satisfied with the final terms.
- Put Minor Issues Aside. If you cannot agree on minor issues, put them aside and complete the main agreement. With the main agreement completed, you’ll find minor issues are far easier to settle.
Here are some tactics for you to use. . .
Used strategically, SILENCE is a powerful negotiating tactic for you to bring into play.
If you’ve stated your price and you're waiting for a response, just sit back and wait. Most people feel uncomfortable when conversation ceases. The buyer (and his agent) will be expecting you to start equivocating on your price just like many real estate agents who have no stake in the sale other than a commission check. Don’t say a word! Almost without fail, your counterparts will start whittling away their position when you use this tactic. The buyer will have been primed to expect you to back off your price or qualify it. You’ll see their discomfort in their body language when they perceive by your silence that you mean business.
Suppose the buyer also understands the importance of silence. After several long moments, simply, restate your price. Don't make suggestions or offer concessions. Just repeat your terms. This maneuver forces the other person to respond, and more often than not, they respond with a concession.
The WINCE is a way to convey via body language your negative reaction to something the buyer or his agent is suggesting without resorting to argument or other negative verbal responses. It alerts your counterparts to the fact that you know your limits and they may be approaching them.
If you are on the receiving end of the wince, you must counter with SILENCE. To do anything else will weaken your position.
Take time to practice both of these techniques so that you are comfortable using them and alert to the precise moments when you should use them. Indeed, you will be pleasantly surprised when you watch the results.
As with everything else that we suggest to assist you through the home selling process, preparation and practice are important. The better you prepare and the more you practice, the more pleasant will be your experience and the greater will be your satisfaction with the entire transaction.