Let’s assume for a moment that I want something from you.
Say we ran into each other, grabbed a coffee and as we’re catching up, I notice your watch.
You’re talking about how money is a little tight but I start tuning out what you’re saying as I stare at your watch. Look at it – all shiny and fancy, making you look like a person of worth and value. With that watch on you, you seem taller, thinner, your hair is fuller and your teeth are whiter.
I begin nodding to myself, saying, “Yes, Jeff, that’s the ticket, you need a watch like that. A watch that tells people you meet you’re upstanding and successful and know the time. Not just know the time, but you know what’s going on, what’s going down, what’s happening.”
I look up from the watch and you’re gazing at me with a bemused expression. You shake your wrist and say to me, “You like the watch?” and I pounce on the question, ready to make your watch, my watch.
In my years as a Realtor, I’ve negotiated hundreds of times for the purchase or sale of real estate. In 2016 the average real estate transaction I helped clients make was just over $758,000, so we’re talking about significant dollar amounts for both the buyer and seller in the transaction.
Not all of the hundreds of negotiations resulted in a purchase or sale. Sometimes we couldn’t come to an agreement and sometimes another party swooped in to seal the deal. I believe it to be true that with proper negotiation, most deals can take place.
As more and more technology is harnessed for real estate, negotiating the purchase or sale of a property remains one of the most important skills your Realtor needs to possess. Without a seasoned negotiator on your side you can leave money on the table or fail to get a deal done.
Let’s go back to this watch of yours that I admire so much and I’ll use it as an example of the three ways in which I’ve seen people kill a negotiation.
I’m gazing at your watch like Gollum gazes at the Ring to Rule Them All and you ask me if I like your watch. I look up and answer.
- Your watch? I was actually thinking it looks broken.
On a number of occasions, I’ve had a Realtor on the other side of the negotiating table tell me everything that was wrong with the property I had listed for sale. It was like the opposite of the marketing material I had prepared, where every good thing was either not mentioned or dismissed and everything he and his buyer didn’t like was explained in great detail.
If I looked at your watch, looked at you and then proceeded to tell you everything that was both inherently wrong with it as well as everything that was wrong for me about it, you might be inclined to tell me to get lost.
Focusing on the negatives (real or perceived) of something for sale as a negotiating tactic backfires if you try it against an experienced negotiator. In the case of the Realtor above, he submitted a low ball offer and when I asked him why the price was so low, he started reciting his list. I let him go on and on about all of the problems and when he finally ran out of steam, I asked him a simple question.
“If all of these things are wrong with the property, why does your client want to buy it?”
In the silence that followed I could have gone and made myself a cup of coffee, read the newspaper, and called my mom for a chat. I finally broke the silence myself and told him it was clear that he and his client didn’t see the value in the property and we would sell it to someone who did.
Within an hour I had a new offer from him at just under the asking price and we sold it. Because it was a nice condo, damnit.
- Huh? Yeah, it’s nice. Here’s how this is gonna work.
If you’ve ever run into someone who’s been given a little bit of power and they’re determined to lord it over everyone they meet, you know how this sort of negotiation plays out.
I’ve dealt with Realtors on both the buying and selling side who were clearly of the belief that they were the only game in town. Every real estate negotiation has four key negotiating points:
- Sale price
- Closing Date
- Conditions (financing, home inspection, status certificate, etc.)
In every negotiation, both sides have preferences for these points. A skilled negotiator does their best to determine which is important to each side and to avoid having them used as negotiating points to impact another aspect. If a quick closing date is valuable to a buyer and I represent the seller, then we can leverage that aspect to get a better sale price.
How do you think the negotiation would go if I looked at your watch and used the fact that you said money was tight to offer you a cheap price, told you I wanted the watch today, that I would pay you next week and only after my brother inspected the watch to make sure it wasn’t a piece of junk? I think you might stand up and shout “Anyone apart from this jerk want to buy a watch?” and see if you can’t find a buyer who treated you better.
Negotiations take place between people – and people like to buy and sell with someone they like. I’m not being naïve when I say this – I know that price and other factors are crucial. I have seen a number of negotiations fail because one side decided the other side was a jerk. Logic makes you think but emotion makes you act and I’ve had a number of my buyer clients win in multiples because the seller decided they liked me and how we approached the deal. Showing consideration for the other side’s situation can result in a better deal.
- Yes I do – here, take my wallet.
The final way to make sure a negotiation fails is to not negotiate. I’m not talking about offering a price and refusing to budge. I’m talking about saying sure, that’s a good price and pulling out your money. I know that sounds like a sure fire way to get a deal done, but think it through with me.
If I offered you anything you wanted for your watch, would you react with joy and take the deal? Or would you raise your eyebrows and reconsider the situation. Did you maybe underestimate the value of your watch if I will pay that price happily? Is there something extraordinary about my watch compared to other watches out there that means I shouldn’t sell it after all?
One of the most frustrating experiences in real estate for a buyer is to find a property they love, at a price they are prepared to pay, and for the seller to decide not to sell it to them. Happily, I’ve only had it happen on a few occasions and in each case it was because the seller did not have trust in their listing agent and when they received an offer for the price they had asked, they decided it wasn’t enough.
When such an event takes place, it is immensely damaging to the relationship between the seller and the prospective buyer. It is not acting in good faith and the buyer proclaims this isn’t fair and the chance of a deal going forward is very slim.
At the end of the day, a negotiation is successfully concluded when both sides come to a deal they feel good about.
In all negotiations, an earnest attempt to negotiate should be made. On many occasions I have had my buyers agree to a price after one round of negotiations, and I feel there is still some money being left on the table. When it is possible to negotiate further without risking the deal in place, I do so. Often, this results in a better deal for my buyers as the sellers agree to an additional drop in price. When done respectfully and with consideration for the other side, “hard negotiating” simply means that the deal achieved is fair for both parties.
If you or someone you like is considering buying or selling a watch..uh..I mean, real estate, please make sure to get in touch. I’d love to be responsible for what comes next.
HOUSE FOR A SMALL FAMILY
Give the house three distinct parts: a realm for parents, a realm for the children, and a common area. Conceive these three realms as roughly similar in size, with the commons the largest.
Whenever I visit friends with young kids, I can tell very quickly if the house is designed properly for them to live in it and follow this lesson. When children’s toys are everywhere and the parent’s room is also the playground for the kids, I know that I’ll be getting a call as soon as finances allow.
When a home is laid out in such a way that there is no distinct parents area or no distinct children’s area, the house quickly feels too small for comfortable living.