Whether you are buying or selling, everyone wants a good deal. If you are a Buyer, you don’t want to overpay. If you are a seller, you don’t want to give your house away. So the question is what’s the most effective way to reach your goal and avoid mistakes. In my opinion, the best strategy is to begin with the end goal in mind. In other words, think about what terms you would like to end up with and then plan your strategy accordingly. The fewer steps it takes you to get there, the less frustration and animosity all parties will have, which will result in a better outcome.
Here are a few tips to accomplish this goal. First, do your research and know the market. Don’t take unreasonable or unrealistic positions. Sellers don’t mind negotiating with a Buyer who is realistic, but not one who is living in “fantasy land”. When one party takes a ridiculous position, the result is often an even more unreasonable response in hopes you will go away. Second, never tell someone this is your final offer, take it or leave it. I’ve had countless experiences with Buyers and Sellers who have retracted a final take it or leave it price. Drawing a line in the sand creates friction and will only make someone less likely to want to do business with you. And even worse, you look silly when you change your mind. Third, focus on things you have in common to help facilitate a sale. Only focusing on the negatives will get you nowhere. Focus on creating a win win scenario. For example, you might offer to let a seller stay in the house for an extended period after the closing (so they have time to move) in exchange for a discount on the price.
Whether you are buying or selling, keep in mind it’s not about where you start, it’s where you end up. Resist the temptation to start too high or low as you will likely create an unnecessary headache and cost yourself time and money.