Learn how you can not only play the negotiation game, but also win.
When my husband and I first started the hunt for Atlanta, GA, real estate, I cringed at the tough negotiating he was doing, as did our agent. “You sound like a fast-talking big-city businessman,” she said to him in her smooth drawl. But as cringe-worthy as it seemed at the time, he was just engaging in some tried-and-true horse-trading — trying to make a deal that both sides could feel good about.
You might be the type of person I was; the kind who never questions the price of an item. If that sounds like you, it can’t hurt to brush up on your negotiation skills, whether you’re buying or selling real estate. When selling your home, your first reaction might be a big “oh heck no” when you get a lowball offer, but take a deep breath and at least consider your options.
Here are six negotiation skills for doing more than just playing the game: for winning.
Price your house right
There’s a difference between the price you want to get (or what you think the house is worth) and what the market will bear. “Pricing is not based on how much a seller needs to net,” says Brian Horan, a broker who specializes in Los Angeles, CA, real estate. “Sellers always seem to need a certain amount, but that has nothing to do with the price of tea in China.” Look into neighborhood comps to give yourself a more realistic idea. A savvy real estate agent will also be able to provide a benchmark for asking prices that reflect market valuations.
Consider the first offer
“Really pay attention to your first offer,” says Chris Leavitt, star of Million Dollar Listing: Miami. “Because that will probably be your best one.” Leavitt, who once sold a Miami Beach, FL, condo for $34 million, the highest condo sale in Florida history at the time, knows a little something about negotiating. “Your best offers usually come at the beginning, so it would be a mistake to not listen to those offers, regardless of what they are,” he says.
Think like a salesperson
“All home sellers should establish their BATNA before listing their house for sale,” says Patrick Malone, senior partner at The PAR Group. (No, he isn’t telling you to become Batman.) “BATNA” stands for “best alternative to a negotiated agreement” and serves as a negotiator’s fallback option in case there’s no deal. Having a BATNA puts you in a stronger negotiation position. Maybe you’ve decided that if you don’t get your bottom line, you’ll rent the place and try again later, or maybe you’ll renovate and stay. Keeping your BATNA in the back of your mind can help prevent you from agreeing to a bad deal out of desperation.
Don’t be an emotional seller
It’s probably best not to listen to Miranda Lambert’s “The House That Built Me” before you enter negotiations with a potential buyer. Garratt Hasenstab, managing broker with the Verdigris Group, advises buyers to do their best to stay levelheaded throughout the process. “This is business, simple as that,” he says. “Rational thinking, business skill, and negotiation skill are what it’s all about.” Hasenstab also recommends that your real estate agent find out the buyer’s prequalification amount from the bank or what the buyer’s desired purchase price is. The more information you have about a buyer’s financial situation and needs, the better position you’ll be in when it comes time to negotiate.
Being stubborn is usually not the best strategy in any negotiation. If your goal is to sell, taking less than your ideal price is usually better than not selling at all. “Sellers must account for the real cost of not selling — not just a monthly mortgage payment, but utilities, insurance, maintenance, yardwork, and risk of vandalism or theft,” says Glenn S. Phillips of Lake Homes Realty in Birmingham, AL. Once you know the total cost of keeping your home on the market each month, it might put offers, even the lower ones, in better perspective.
If you and your potential buyer are at a stalemate regarding price, it might be time to entertain some out-of-the-box ideas. Chris Leavitt suggests you offer to throw in the furniture. Phillips asked for some extras when buying his first home: the riding lawn mower, the window treatments — and even the dog. It paid off: “Mikey the Mortgage Dog has been one of the best dogs ever.”