Overcoming Fear of Negotiating (Part 2) . . .
Posted under: Home Selling in Boulder
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November 6, 2009 12:31 PM |
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Negotiating is always stressful. It can be agonizingly traumatic when treated as a contest in which each side tries to outwit the other and gain a perceived advantage.
Unlike in most "games," negotiators seldom know if they achieved the "best" possible result. There rarely is a clear winner or loser, which can leave highly competitive souls second-guessing themselves long after a deal has closed.
For your own peace of mind and for the sake of achieving a truly successful result, it usually is best to think of negotiating in more cooperative terms.
When everybody walks away from the table satisfied, everyone can be proud of the result. And, often that result is better for all.
However, achieving a mutually agreeable solution can take much work. As mentioned in the first part of this two-part series, there are several techniques that make such a conclusion more achievable.
We will explore these approaches in detail here.
Go for the "win-win" solution. The most solid deals are struck when everyone's needs is met. Look for common ground.
Most negotiations, including those involving real property, result in complex, multi-faceted deals. Sometimes, one negotiator can make concessions that matter little to him or her, but are important to the other side. This can result in significant concessions in return.
One key to successful real estate bargaining involves taking the time to really understand the other side's interests. This means getting behind verbalized positions. A negotiating position usually represents an attempt to do what is in a person's best interest. Sometimes the other side's position evaporates when you propose a new position that serves that interest equally well (or even better).
For example, a woman suggests she cannot exceed a certain purchase price. That number is her position. Upon questioning, you learn she feels restricted by anticipated monthly payments. Keeping to a monthly budget is clearly in her interest.
Yet, in today's world, many creative lending programs exist. It may be worth your time to look into some and demonstrate that she could afford a more expensive home without breaking her monthly budget. Or you may be able to demonstrate that utility bills and/or taxes will be considerably lower than she anticipates, leaving more money for the mortgage bill.
Your extra work could salvage the deal and the buyer will probably thank you for the effort. The trick to "win-win" is asking a lot of questions and listening carefully. Only through understanding will you help solve the real and perceived concerns behind the other side's negotiating positions.
Keep emotions in check. Emotions often get in the way of good, even great, real estate deals.
Whether you are a buyer or a seller, you will probably discover that the other side resists ideas you thought would be slam dunks. Don't get too frustrated. Listen carefully, then go back to the previous section and search again for "win-win" solutions.
If you are a seller, you've almost certainly spent much time and effort making this house your home. You probably are more attached to the dwelling than you realize.
But the wall colors you lovingly chose may clash with the buyers' furniture. The attached bookcase you built by hand may stand where new owners wide-screen TV will hang.
You must get used to the idea that your home will become their home. You must put these feelings aside for the sake of the deal. (And if you are buying the home, try to keep your plans for the dwelling to yourself.)
In the early stages, never negotiate orally. Real estate deals are complicated. You probably will make bad choices if you let the other side talk you into concessions on isolated issues -- especially issues involving money.
When someone wants to negotiate on the spot, politely suggest that the whole deal should be put in writing. Then the responding side (usually the seller) can reply appropriately.
A seller who makes a verbal price concession establishes a new asking price in a buyer's mind. The formal bid may reflect the reduced amount, but also ask for extensive and costly repairs to the house. Or the bid may come in below the seller's new price.
Solve easy problems first. As noted above, verbal negotiating rarely works during the early stages. However, when the basics are in place, some informal communications may expidite the deal.
Understanding a simple, yet very important fact of human nature will make you a much better negotiator. The longer people cooperatively work at something, the more attached they become to the idea of concluding the process.
As small issues get worked out, people become more optimistic and confident about struggling through larger ones. This builds rapport between the sides, which lubricates the process.
Know your BATNA (best alternative to a negotiated agreement).
This powerful concept, first introduced in Getting to Yes, a landmark book about negotiations by Roger Fisher, William Ury and others from the Harvard Negotiation Project, will help you decide when "no" is the best answer.
Because home deals are highly complex, this idea beats the heck out of having a "bottom line" or "top line." It's not always money that makes or breaks a deal.
But, if a seller knows that leaving the home up for sale, renting it, or withdrawing from the market beats all current offers, then the seller will not feel compelled to spend time on bad proposals.
Similarly, a buyer who understands the marketplace knows if better offers exist elsewhere. Such a buyer won't be afraid to walk away and buy elsewhere.
Nothing improves one's negotiating position more than having solid alternatives. No is a strong, though often final, negotiating position.
Be prepared to negotiate twice. The basic real estate deal will be hammered out during contract negotiations. However, a second, smaller negotiation usually occurs after home inspections. House inspectors routinely find issues. It is their job.
Buyers typically want the most significant problems fixed. Sellers won't necessarily do everything buyers ask, but will almost always make a some repairs and/or provide money for improvements after closing.
This need not create serious problems.
If all parties remianed respectful through contract negotiations; if negotiators have listened well and responded appropriately; if emotions have not run wild, then this final hurdle will be the easiest to clear.
(Ron Rovtar is a broker associate at Prudential Real Estate of the Rockies in Boulder. He can be reached at 303.473.1926)
Unlike in most "games," negotiators seldom know if they achieved the "best" possible result. There rarely is a clear winner or loser, which can leave highly competitive souls second-guessing themselves long after a deal has closed.
For your own peace of mind and for the sake of achieving a truly successful result, it usually is best to think of negotiating in more cooperative terms.
When everybody walks away from the table satisfied, everyone can be proud of the result. And, often that result is better for all.
However, achieving a mutually agreeable solution can take much work. As mentioned in the first part of this two-part series, there are several techniques that make such a conclusion more achievable.
We will explore these approaches in detail here.
Go for the "win-win" solution. The most solid deals are struck when everyone's needs is met. Look for common ground.
Most negotiations, including those involving real property, result in complex, multi-faceted deals. Sometimes, one negotiator can make concessions that matter little to him or her, but are important to the other side. This can result in significant concessions in return.
One key to successful real estate bargaining involves taking the time to really understand the other side's interests. This means getting behind verbalized positions. A negotiating position usually represents an attempt to do what is in a person's best interest. Sometimes the other side's position evaporates when you propose a new position that serves that interest equally well (or even better).
For example, a woman suggests she cannot exceed a certain purchase price. That number is her position. Upon questioning, you learn she feels restricted by anticipated monthly payments. Keeping to a monthly budget is clearly in her interest.
Yet, in today's world, many creative lending programs exist. It may be worth your time to look into some and demonstrate that she could afford a more expensive home without breaking her monthly budget. Or you may be able to demonstrate that utility bills and/or taxes will be considerably lower than she anticipates, leaving more money for the mortgage bill.
Your extra work could salvage the deal and the buyer will probably thank you for the effort. The trick to "win-win" is asking a lot of questions and listening carefully. Only through understanding will you help solve the real and perceived concerns behind the other side's negotiating positions.
Keep emotions in check. Emotions often get in the way of good, even great, real estate deals.
Whether you are a buyer or a seller, you will probably discover that the other side resists ideas you thought would be slam dunks. Don't get too frustrated. Listen carefully, then go back to the previous section and search again for "win-win" solutions.
If you are a seller, you've almost certainly spent much time and effort making this house your home. You probably are more attached to the dwelling than you realize.
But the wall colors you lovingly chose may clash with the buyers' furniture. The attached bookcase you built by hand may stand where new owners wide-screen TV will hang.
You must get used to the idea that your home will become their home. You must put these feelings aside for the sake of the deal. (And if you are buying the home, try to keep your plans for the dwelling to yourself.)
In the early stages, never negotiate orally. Real estate deals are complicated. You probably will make bad choices if you let the other side talk you into concessions on isolated issues -- especially issues involving money.
When someone wants to negotiate on the spot, politely suggest that the whole deal should be put in writing. Then the responding side (usually the seller) can reply appropriately.
A seller who makes a verbal price concession establishes a new asking price in a buyer's mind. The formal bid may reflect the reduced amount, but also ask for extensive and costly repairs to the house. Or the bid may come in below the seller's new price.
Solve easy problems first. As noted above, verbal negotiating rarely works during the early stages. However, when the basics are in place, some informal communications may expidite the deal.
Understanding a simple, yet very important fact of human nature will make you a much better negotiator. The longer people cooperatively work at something, the more attached they become to the idea of concluding the process.
As small issues get worked out, people become more optimistic and confident about struggling through larger ones. This builds rapport between the sides, which lubricates the process.
Know your BATNA (best alternative to a negotiated agreement).
This powerful concept, first introduced in Getting to Yes, a landmark book about negotiations by Roger Fisher, William Ury and others from the Harvard Negotiation Project, will help you decide when "no" is the best answer.
Because home deals are highly complex, this idea beats the heck out of having a "bottom line" or "top line." It's not always money that makes or breaks a deal.
But, if a seller knows that leaving the home up for sale, renting it, or withdrawing from the market beats all current offers, then the seller will not feel compelled to spend time on bad proposals.
Similarly, a buyer who understands the marketplace knows if better offers exist elsewhere. Such a buyer won't be afraid to walk away and buy elsewhere.
Nothing improves one's negotiating position more than having solid alternatives. No is a strong, though often final, negotiating position.
Be prepared to negotiate twice. The basic real estate deal will be hammered out during contract negotiations. However, a second, smaller negotiation usually occurs after home inspections. House inspectors routinely find issues. It is their job.
Buyers typically want the most significant problems fixed. Sellers won't necessarily do everything buyers ask, but will almost always make a some repairs and/or provide money for improvements after closing.
This need not create serious problems.
If all parties remianed respectful through contract negotiations; if negotiators have listened well and responded appropriately; if emotions have not run wild, then this final hurdle will be the easiest to clear.
(Ron Rovtar is a broker associate at Prudential Real Estate of the Rockies in Boulder. He can be reached at 303.473.1926)
This Article © Ron Rovtar/All Rights Reserved
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