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Negotiating a Sale

(A continuation of How to Sell a House)

By - 2006

Negotiating a sale of a home could be a book-length subject on its own, but I'll touch on it briefly here. This is another one of those reasons why it can sometimes be a mistake to sell your home on your own. A good agent, after all, has some good negotiating skills learned from experience. If you sell it yourself, use the following tips, but you may also want to consider reading a good book on the subject.

Some Basic Negotiating Tips and Tricks

Try to Find Win-Win Solutions

Always look for win-win solutions, and present them as such. When I was selling real estate, I noticed that sellers often assumed that the buyers just wanted the lowest price. While this is often true, buyers also want an easy transaction. A seller who offers this can get a higher price, and both sides will win.

The key to good win-win solutions is to find non-conflicting needs or wants. For example, if the buyer needs to buy with less cash, and you want a good price, you could suggest that the price be raised, while you pay more of the closing costs. Both sides win.

If you are moving to a smaller place, and the buyer needs to furnish his new home using limited cash, you have a perfect win-win possibility. The seller can come up $4,000 on the offer, and you can leave some of the furniture, and perhaps the large refrigerator and washer and dryer. The larger mortgage loan adds only $25 per month to the buyers payment while preserving cash, and you don't have to try to fit all that stuff into your new place.

Use the Limited Authority Ploy

Limited authority may be a reality, or may just be a tactic used when negotiating a sale. In real estate it is common to say something like "I'm not sure if I can do that. I have to okay it with my wife." That may or may not be true, but it is a way of putting off the issue, or possibly getting the other side to drop it, or making your rejection of the idea less personal ("Sorry, my wife said no").

When it's used against you, a subtle ego-attack may reveal it to be just a tactical move. Try something like, "If you can't make that decision, who has the authority to decide? Should I wait and talk to someone else?" Sometimes he'll feel inclined to "prove" he has some authority, and will make the decision after all.

When you use the tactic yourself, try it in a way that encourages the other side to concede something. You might say, for example, "I don't know if my wife would be okay with that or not. I'll tell you what; If we can get the price up to $145,000, I can probably get her to agree."

If the buyer then tries the ego-attack on you, just smile and say, "I'm sorry, my wife insists that I do the negotiating, but she won't let me make the final decision."

Exclude Competition

If you could exclude other sellers, you would have a better chance of getting what you want from that buyer, right? Start by never mentioning other homes. The buyer may mention them, so have a response ready. "I know there are other homes that might work for you, but will those sellers pay your closing costs?" Find ways to set yourself apart from the competition.

Set Aside Problems for Later

It is often best to set it aside tough issues and come back to them later. This is partly because of the psychology of time-investment. Spend time nailing down the other points, and the buyer won't want to throw away the deal as easily. This means that when you finally return to the tough issue, he may be more willing to give you what you want.

Just say something like, "Let's set this aside for the moment, and come back to it later. There are other things I think we can easily agree on, so let's get those worked out first." Usually the suggestion will be accepted. It may even be a relief to all involved to let that issue drop for now. Then, with time and more trust-building, you can return to it in a stronger position.

Build Trust

Building trust can help keep things going smoothly when you are negotiating a sale. It can also help you get what you want in circumstances where the other side might doubt your intentions. So how do you build trust?

Telling the truth is a start, of course, but you can also approach this in a more active way. Make it a point to promise things that you can easily follow through on. This could be as simple as saying, "I'll get that copy of the survey to you by tomorrow morning." Let the buyer know what you'll do, and then do it. Just delivering the survey without first saying you'll do it won't be as effective for building trust. Find things to promise, and be sure to follow through.

Compromise

The compromise is one of the essential elements of negotiation. Both sides expect to have to compromise on many points, and it is the easiest way to settle a difference. How you arrive at that compromise, though, is crucial.

For example, it is common for someone to say something like, "Look, we're only $6000 apart now. You want to $204,000, and I want $210,000. Why not split the difference and make it $207,000?" Of course, if you had only come down to $216,000 then "splitting the difference," would mean a price of only $210,000. That's why it's important what you do before the compromise.

Extreme initial positions can help here. You can let the buyer come up $2,000 at a time from his first offer, while you drop your price by only $500 with each counter offer. That way you'll get a higher price when the compromise solution is suggested.

This can be too obvious though, so you may want to also negotiate for other points that are of little concern to you, just so you have something to "throw back in the pot" when it's time for a compromise. In the example above, you might have previously dismissed leaving the washer and dryer, just so when the buyer hesitates over the proposed compromise, you can say, "Look, why don't you take the washer and dryer too, and we can sign this right now."

Let the Seller Be the Smart One

Make an offer their idea. You might say something like, "Are you saying you'd like a later closing, and less earnest money? Well let's do it your way, then. I just need..." and then you ask for what you need to get for "their" offer to work.

We continue our look at negotiating a sale of a home with a basic negotiation checklist and suggestions on what to include in the purchase agreement...

The book continues here: Negotiating a Home Sale - What to include in the contract.


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Houses Under Fifty Thousand | Negotiating a Sale