In real estate brokerage, there is negotiating every day at almost every step of the buying or selling process. Whether it is negotiating the initial price and terms to the request for repairs, being a good negotiator (or having a good one on your team) is imperative in order to be successful.
Here are questions you need to ask yourself before negotiating anything. Once you answer these, it will help in establishing what to do next:
- What is the goal? Are you trying to buy that car or house? Trying to get that raise? Determine what the objective is. Keep in mind what the other side’s goal is as well. Just like you may want to buy the house for as low as possible, the Seller wants to sell as high as he/she can. Therefore, be realistic in what you want.
- Who has the most leverage? This is extremely important. If you are in multiple offers, then the Seller has leverage. Conversely, if you have inspections reports on the home as a buyer that puts the Seller in an awkward position, then you have more power. It all depends. Another great example where I see people fail is potential tenants negotiating the rental price with the landlord. In Los Angeles, where we are short housing, landlords have a lot of leverage.
- Are you willing to walk away from it all? The person who cares the least has the most leverage. When I negotiated my latest car lease, I had no problem walking away from the dealership, and they knew it. Therefore, they worked with me to get as close to what I wanted. The best part? I only spent about 15 minutes negotiating. None of this 8-hour going back and forth. If you are willing to walk away, understand the risk associated with it.
- Is there a way for it to be a win-win? When opposing parties lock horns on price or terms it can trigger a ‘fight or flight response” in one or both parties. When that happens, it can be very helpful to take a step back and think creatively within your goal and offer suggestions to where both parties can feel okay about the outcome.
These beginning steps will set the stage for how the rest of the negotiations will end up. Hope this helps and happy negotiating!
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