Negotiations

Welcome to the world of give and take. We have all heard that “Everything is negotiable.”  That being said, it’s important to separate the worlds of negotiating and capitulating. So let’s give an example.  The seller wants $300,000. You offer $250,000. OK, you are negotiating.  If they agree to your price they have capitulated. If they come back and say, “No,” they have terminated negotiations. This is true, at least,  for the time being.  One can always come back and further negotiate, but that doesn’t necessarily always get you what you want.  A good rule of thumb on this is, the longer negotiating lasts the less likely the parties are to get what each of them wants. If there is a constant and protracted period of back and forth, it is more than common for one or both of the parties to simply throw their hands up and say “enough” and they will move on to someone else who will offer a more conclusive negotiation.

Something else to consider when you negotiate is there are many other factors that can also get negotiated, in addition to price. Using the above scenario, the buyer might have included the fact that they were paying cash. Most people think they should get a better price if they are paying cash.  In the current market we are not seeing this. Cash may win in a competitive offer but it doesn’t typically get you a discount. It just gets you the house over offers that have financing terms that may or may not ultimately get approved.  Other negotiating strategies include, not demanding a home inspection contingency, not asking for extras, like furniture/appliances, etc.  You might really be able to get into power negotiations just by being super flexible and accommodating on the closing date.  Oddly enough, in my experience, this last tactic accounts for successful negotiations in nearly 20% of all transactions.

We have also heard the expression ” to always negotiate from strength.” Frequently, and this is with a lot of inexperienced buyers, they will put an offer together that looks almost silly and sometimes insulting.  They will attempt to low ball the price, then they will ask for the flimsiest of financing terms and go on to ask for all of the furniture/appliances and an incredibly long closing date. I always suggest that the buyer put themselves in the seller’s shoes. The seller should do the reverse. When each party does this the next question would be, “Why would they do this.”  Unless the seller is desperate, why would they cave to all of these ridiculous terms?  Just because you can offer anything you want, it doesn’t mean you will find someone that is willing to capitulate to them.

Effective agents are skilled at negotiating on your behalf and they can and will present the most complete picture for YOU. Price is certainly a key part of the package but by not introducing the other critical components, many serious opportunities can get missed or overlooked. And remember, just because you can offer anything you want, it doesn’t mean you should.  Smart buyers buy. They don’t pretend to buy. They don’t go around insulting sellers with ludicrous offers with idiotic terms. They offer the seller what they can reasonably expect them to accept and what they think they can afford to pay. It should be fair for both parties. It’s not a hard concept.