In real estate, we have negotiations throughout the course of the transaction. Whether you are buying or selling, there are four things I recommend you keep in mind to move us through negotiations:
1. Know your expected and desired outcomes.You should also determine what your acceptable outcomes will be. Usually, there is an ideal outcome and an acceptable one. Most of the time, a successful negotiation lands somewhere in between the two. It’s important to know what your acceptable and ideal outcomes are up front in order to set yourself up for success.
When you determine your acceptable and ideal outcomes, keep in mind that there are many different factors that will come into play. For example, if you are selling a house, don’t just look at your acceptable price and ideal price. Consider market factors, why you want to move, and the opportunity cost of not selling your home. In other words, what do you hope to gain by selling?
All of these factors will determine which outcome you achieve.
2. Know your leverage or lack thereof. Know who holds the cards during the negotiation. Knowing where you stand will help you make better decisions and have a more fruitful conversation during the negotiation process. It’s your Realtor’s job to help you know who holds the cards. Of course, that depends on whether you are buying or selling, market conditions, days on market, and a number of other factors. Still, knowing where you stand will help set expectations and guide the conversation in a more productive manner.
3. Keep the conversation going. Negotiations die when the conversation ends. As long as we continue to talk and work toward an acceptable outcome for both parties, we try to get a win-win for both parties. As long as both parties are still engaged and working toward that, then we have a live negotiation. When one person backs off, that’s when things start to die, so make sure to keep both parties at the table.
4. Be flexible. It’s human nature to want to dig our heels in and say, “That’s it, I’ve given an inch. I’m not giving any more.” When this happens, you’ve lost sight of your acceptable and ideal outcomes. Being flexible is more about the way you feel than the business side of the transaction. Digging your heels in is never good. You will aggravate the other party, the conversation will end, and you’ll be left with a dead negotiation.
Being flexible allows you to give the other party what they think they want. Every party wants to get something. Sometimes giving a little bit makes the other person feel a lot better. They feel like they won something, and that is what drives you through to closing. If you dig your heels in, that could lead to other problems during the negotiation process.
If you use these four tactics, you will have a successful negotiation and make it to the closing table.
If you have any other questions about negotiations or buying or selling a home, just give me a call or send me an email. I would be happy to help you!