Finally! It’s been a long time since buyers even had the chance to negotiate, and while the reasons for that aren’t great (decades-high interest rates) and some properties are definitely still benefiting from multiple offers (location, type and original asking price dependent), there are some good properties that have been sitting. Now and into the end of the year is the best time to start sifting through them, which brings us to the much written-about, invaluable art of negotiation.
In real estate, negotiation is an indispensable skill that’s honed over time with experience. While every negotiation brings its own unique challenges and circumstances, here are 9 key tips I found hold true across the board.
1. Know the other party and study their goals
Before diving into negotiations, the more you can find out about the seller’s motivations and objectives, the more you can tailor your offer to match their goals. Sometimes it’s only about “show me money,” but just as often—especially if a property has been sitting or they’ve been through a tough failed negotiation before—a quick close of escrow that has no contingencies may trump money. Lean on your agent for that insight. A good one will be able to learn a lot even if the listing agent isn’t as forthcoming.
2. Get the seller’s agent on your side
Real estate agents play a pivotal role in negotiations. If an agent has recent experiences with challenging negotiations, they can influence their clients’ decision. Building a positive rapport with the seller’s agent and showing that you’re a reasonable partner to get into a deal with can work in your favor, as they may advise their clients in your direction.
3. Don’t violate the rule of being too difficult to deal with
Negotiating should be assertive, but not aggressive. Striking a balance between standing your ground and being cooperative is essential. Being overly difficult to deal with or inflexible can harm your chances of reaching a mutually beneficial agreement.
4. Trust should be earned, not lost
Trust is the cornerstone of any negotiation. Never lie or deceive in negotiations. It always comes out in the end. Building and maintaining trust (AKA doing what you say and saying what you do) can be a powerful leverage point in real estate. Displaying trustworthy actions will enhance your negotiation outcomes and long-term relationships. To that end, responding in a timely fashion falls under the trust category.
5. Know when not to push too hard
Avoid overplaying your hand. Sometimes, buyers may attempt to negotiate based on market conditions or external factors. Understanding when it’s appropriate to push for a better deal and when it’s best to be flexible is crucial. Being reasonable about close times and contingencies fall under this category.
6. Be timely
Real estate negotiations are often time sensitive. Don’t assume that because a property has been sitting on the market for a long time you have unlimited negotiation time. Competing offers can emerge suddenly, and delaying your decision could cost you a great opportunity.
7. Don’t get offended during negotiations
This is a big one. Emotions can run high in real estate deals. Avoid taking offense or reacting emotionally to counteroffers or tough negotiations. Staying level-headed and professional will serve you well in the long run.
8. Never let the deal die on your end
Regardless of how challenging the negotiation becomes, don’t let the deal die due to a lack of response or stubbornness. Even a seemingly ridiculous counteroffer can be the starting point for further discussions. A night of sleep can often change the dynamics. Another way to say this is keep your ego out of it. I’ve seen more than one deal die because a party didn’t want to ‘lose,’ regardless of whether that offer was in their best financial interests.
9. Be timely but be patient
Balancing timeliness with patience is key. While being prompt in your responses is important, it’s equally vital to exercise patience throughout the negotiation process. I’ve seen many a seller change their minds after a night’s sleep or a weekend to mull it over. Often if there are multiple sellers there is one party who is willing and another that has to come around to it.
Mastering a real estate negotiation requires a blend of skills and a deep understanding of the market, as well as a keen awareness of the parties involved (AKA psychology). Find a great agent that will keep you and your real estate goals on track. The best ones are there to serve but never push.
Need help? You know where to find me.