Do you or your neighbors ever come back from the car dealership saying “Man, I really botched the negotiations on my new car and I really ended up over paying for it”? Of course not, everybody likes to express what a tough and hard nose negotiator they are and what a good deal they were able to get. The same thing happens in real estate transactions. Your neighbors always claim that they were “successful” in their negotiations on the sale of their home and have a tendency to overinflate the value they received for the property. I know this because many, many times, at a listing appointment, the seller has an artificially high opinion of the value of their home based on what their neighbor has told them they received when the actual public record of the sale tells a different story.
This begs the question of what categories negotiators fall in? I have characterized these “types” of negotiators into a few common categories for humor and also to let you self-evaluate your own sales negotiations.
The Yard Sale Buyer-Of course this negotiator is never paying anywhere near list price regardless of how aggressively the home is priced in the first place. No matter how many statistics you show them about how much they are doing better than what the home SHOULD sell for, they won’t budge. This may work well with yard sale items where it is difficult to establish a value but it is relatively easy to determine what a home is actually worth in the real estate market.
The Oh My God Can We Just Be Done Negotiator-This negotiator is absolutely petrified of the negotiation process and generally will accept almost anything to simply be done with the process. This emotional if not psychological need to not be in conflict is sometimes disastrous in negotiations. It is very easy for an unscrupulous agent to take advantage of this client but we always advise them to a better negotiating position. Sometimes this advice is taken and sometimes it is not.
The Continuous Negotiator-This negotiator is never satisfied with the currently negotiated price and terms. If they moved any on the price or terms of the home in the beginning they hold a chip on their shoulder about how they are being taken advantage of when it comes to repairs or simple things like extending the closing by a couple days. The fact that you conceded 2% on the sales price is irrelevant to the fact that your property is found to contain mold or needs a new roof. They are completely independent negotiations. As a buyer, this negotiator will continue to ask and ask for concessions at every opportunity within the transaction. Bottom line, in almost every transaction, both parties have to ask for some form of movement from the other party during a transaction. If you have taken advantage of every crack in the transaction but now need something from the other side, what do you think your chances of them being amenable and flexible are?
The Unrealistic Equivocator-This negotiator will equivocate the presence of a new refrigeration unit in their home to the presences of a pool in a comparable home as being equal in value. A new refrigeration unit is a plus and allays the fears of the buyer about having to suddenly replace it but it does not necessarily add actual value to the home because every home should have a working AC unit. This same buyer or seller will also make rationalizations that for instance, a 3 car garage doesn’t add value to a comparable home because they don’t need a 3 car garage. The added features in a home that are concrete add a well-defined value to the price of a home. In this example, a 3 car garage versus a two car is usually $7500-$10,000 and that is backed up by appraisal adjustments.
The Paranoid of Losing Negotiator-This negotiator would absolutely die if their first offer or counter offer were to be accepted. In reverse, I have witnessed sellers receive an absolutely perfect offer early in the process and literally pick it apart to find something to counter (often resulting in accepting a worse offer days or months later). The perfect illustration of this negotiator was an offer I received several years ago approximately 35% under the list price. As expected, the sellers were insulted and didn’t want to counter at all. I recognized this negotiator and finally convinced them to give their best counter. Still a little angry, they agreed to come down $100. That is correct. $100 versus an offer that was $70,000 low. The buyer accepted and we closed right on schedule. The Abrasiveness is the Most Important Thing Negotiator-Some people are just angry. Every day, all the time and as a result they are abrasive in every aspect of their lives. Unfortunately, this abrasiveness often gets rewarded by weak or passive negotiators which further emboldens and reinforces the behavior. There are many real estate agents that also operate in this domain. They forget that they will subsequently have to work with the small pool of producing agents again and again. The only successful strategy with these types of people is to simply kill them with kindness. I have read quite a few articles on negotiating but more importantly I have been on both sides of thousands of transactions? One article recommended to find “the most hardnosed, irritating and determined agent” you can find. Do you really want to be stuck with an irritating agent for the next 90 days? I negotiate hard and am determined to get the maximum for my clients but that can be done in a friendly manner which will actually attract the other local top producing agents to want to do business with me and my clients. The agent that is always abrasive and condescending to agents will have a harder time selling their listings because the other agents don’t want to work with them. Advising my clients as to what moves to make and when to make them is a very precise art which requires a very local expertise on what the market is doing. Common to most articles was the advice to never meet in the middle during negotiations. Hard line stances such as this will ruin more negotiations than the benefit of obtaining a few extra dollars. Both articles had a couple of things that I did agree with and have promoted for years. They both agreed that it was best to check your ego at the door. They also agreed that information is power. The feel for the currents in the market as well as solid information properly adjusted is something that only a highly qualified, highly experienced agent with intimate knowledge of the area can provide. Probably the hardest piece of advice given was to stop talking and start listening. This is good advice in almost any situation but is especially valuable in real estate negotiations. Finally, I would add a few of my own pieces of advice based on almost 30 years and hundreds of transactions. 1. Never let the transaction die on your side. Always counter no matter how low or insulting the offer. 2. Never buy you home back for a few dollars. Those few repairs you are asked to do is usually offset by the value of the presence of the buyer. 3. Set aside your emotional attachment to your home and the work you have done on it and try to view the transaction from the buyer’s perspective as well.