Have It Your Way?

Over many years I have observed and participated in hundreds of negotiations, many of them badly handled. Negotiation is substantially the same whether you are buying cars, jewelry, or real estate, although it is profoundly different from country to country. In Africa, in the Middle East, in Asia, many of the cultures are bargaining cultures and more aggressive bargaining is expected and respected. The same level of aggressiveness in an American negotiation could get you a punch in the nose, or at least create a hostile environment which is difficult to overcome. That said, everyone expects real estate deals to be negotiated, so here are a few do’s and don’ts to make you as effective as possible:

* DO your homework. Make sure you know the comparable sales and the pace of the market.

* DO have a strategy. Don’t make a first bid, or counter one, until you know where you want to go and how you plan to get there. Plan for at least a few back and forth interactions, preferably involving increases or decreases of diminishing size.

* DON’T be a “one offer wonder.” The LEAST successful negotiations are the ones which begin with a buyer who claims to be making one offer, take it or leave it. This is NOT an effective technique.

* DO be reasonable in your original offer or counter. If the market is strong, don’t offer 25% below the asking price.  And if you receive a reasonable offer for your property, always counter and counter aggressively. You can make much smaller counters the second or third time around. A big initial counter sinks the hook.

* DON’T get stuck on details when you are close to a deal. I have seen multi-million dollar transactions founder because neither side would give an inch on the last $10,000. This isn’t good negotiating; it’s just ego.

* DON’T personalize! A low offer isn’t insulting you personally if you are the seller and likewise a small counter if you are the buyer. This is a business transaction even though it involves that most personal of possessions, your home. And if your broker is having a big emotional reaction rather than trying to keep YOU calm and focused, fire him. He isn’t doing his job.

* DO remember that there are other important issues than money. Closing date, inclusions, contingencies or lack thereof – they can all be extremely significant influencers in a negotiation.

* DO have fun. Negotiating is a game, albeit a high stakes one. Enjoy it!