Reprinted from Broker Agent Magazine
Negotiating is something that most clients expect from their agents. But too many agents are either hesitant to do it or don’t just know where to start. Before you begin to negotiate there are three simple steps to follow that will give you the framework and confidence you need.
The first step is to understand that negotiations are really like playing a game of cards. You need to know as much as possible about the other player’s cards without letting them know anything about your hand. If you have a weak hand then you may be paying list price. If you have a strong hand you may get a great deal. Search for the information, ask the questions and look for the clues that will show you the motivations of the other side?
When I asked a listing agent why the seller was moving they answered, “They took a job in another city”. That one phrase “took a job” caused me to lower our bid by over a $1,000. If the agent had said relocated I wouldn’t have negotiated as much because “took a job” means they left on their own and are paying all their own expenses. Relocated means some one else is footing the bill and will buy them out if they can”t sell. I knew my hand was stronger and played the game accordingly.
Negotiations are all about exerting pressure and the second step is seeing how you can put pressure on the other party. Once I was trying to beat out two other bidders for a house and the listing agent told me that the sellers were in her office for the last five hours trying to settle the deal before they left for vacation. And they were getting stressed and anxious. I immediately made our last and highest offer but left it open for only 10 minutes. The idea was to make it hard to say no and to end the bidding war. Pressure is exerted to get you the best price possible. That may be more then list price or it could be a great deal less. It just depends on who is holding the cards.
The third step is to not be confrontational. The idea is to get the other agent to sell your position to their client. If my buyer”s hand is stronger then the seller’s then I may say something like, “I know this offer is a little on the low side but I had a hard time even getting my buyer to this position. See how close you can get the seller to it and I’ll see if I can get the buyer to move up”. You want the listing agent to tell the seller that it may be risky to not counter in our price range and they could lose the deal if they don’t come a little lower then they wanted.
Start with these three simple steps and next time you negotiate, see who holds the cards, find a way to exert pressure and don?t be confrontational. Then the other agent may help you achieve your goals.