Selling Real Estate - Negotiating a Compromise

By: Steve Gillman

For some people, negotiating is the most difficult part of selling real estate. This is one of the reasons so many turn to professionals for help. After all, a decent real estate agent should have some experience in negotiation. But what if you want to sell on your own? In that case, you need to learn a few negotiating techniques, starting with the following one.

Negotiating A Compromise When Selling Real Estate

When selling real estate, compromising is so common that it is treated almost as just a nice custom, and people forget that it is also a negotiating technique. Both the seller and the buyer expect to compromise on many points, because it is the easy and acceptable way to settle a difference. But how you arrive at a compromise, is crucial.

Suppose a buyer says something like, "Hey, we're only $8000 apart now. You want $212,000, and I want $204,000. Maybe we should split the difference and make it $208,000?" The idea of "splitting the difference" is a cultural norm. You may not agree to it, but it seems reasonable and non-offensive for someone to suggest it.

For the smart negotiator, however, the question is how this "difference" is arrived at. At what price did the negotiations begin, and how did they proceed? In other words, did you start at $220,000, and the other side $198,000? Did you yield a little bit at each step, or a lot? And what about the buyer?

Let's look again at the example above. Suppose you had only dropped your price to $218,000, instead of $212,000, and managed to get the buyer up to an offer of $206,000. The difference would be $12,000, but in this case, "splitting the difference," would mean a price of $212,000 - $4,000 more for you. What you do before the compromise is obviously important.

Extreme initial positions can help, of course - if you don't scare the other side away. Real estate investors use this technique all the time. They don't actually expect to get a property for 20% less than the asking price, but a low offer plants a seed of doubt in the sellers mind as to the value. It lowers his expectations. In the end, he may be happy with a compromise that gets him 10% less than his asking price, even though would have rejected it out of hand as a first offer.

When selling real estate, it is difficult to use extreme initial positions as part of your strategy. You'll most likely just scare away potential buyers if your price is too high. What you can do, however, is move in smaller increments than the buyer prior to a compromise. For example, you can let a buyer come up $2,000 at a time from his first offer, while dropping your price by only $500 with each counter offer. If a compromise is suggested at some point, it will be at a higher level thanks to your smaller moves.

A technique like this can scare the other side away, though, if it is obvious. You can make it more subtle, though, by negotiating for other points that are of little concern to you. These minor points you win give you something to "throw back in the pot" later.

If, for example, a buyer wants the washer and dryer to stay with a house you're selling, you can say no - even if you have no use for them. Then later, when the buyer hesitates over a proposed compromise, you can say, "Look, if I throw in the washer and dryer too, we can sign this right now, right?"

There are, of course, many good negotiating techniques you can use when selling real estate. It may be worth your time to learn some of them, and learning the art of the compromise is a good start.

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