How To Negotiate With Buyers

Many people often think of the process of negotiating as somewhat unpleasant, as it implies some degree of conflict. However, negotiation is simply a way of finding a solution which is acceptable to everyone involved – it is not a means by which one parties wins and the other loses. When negotiating the sale of your house, always remember that the fair market value of real estate is that where a willing buyer and willing seller meet.

After putting your house on the market, you may well get offers which you simply wish to accept or not accept. There may however, be other instances in which a bit of negotiating will be necessary. Given this, it pays to at familiarise yourself with some general principles relating to negotiating a mutually acceptable deal.

Do Your Homework

When it comes to selling your own home without the use of a real estate agent, it’s a good idea to to be well prepared for any negotiations that may take place between you and the buyer. This preparation involves not only being able to back up your asking price with facts (comparable sales in the area, features of the property etc.), it also involves having at least a basic understanding of some commonly used negotiation techniques.
Have the facts on hand which support your asking price, and try to have a reasonably good idea about recent comparable sales in your area, and infrastructure which already exists or is being planned. How does your property compare with others on the area? What has happened to house prices in your area in recent years? Knowing all these things will put you in a position of strength from which you can then negotiate.

Tips for Negotiating

1. Be confident. Having done your homework and having decided on your asking price, don’t be afraid to be assertive. If need be, explain to the buyer why you consider the price to be realistic and fair, and how you came to this figure. Remember, you will generally have a lot more information and knowledge about the property than they will. Use this knowledge to your advantage by being confident during negotiations.

2. Be prepared to compromise, and concentrate firstly on the main issues. If you try to win each and every point during the negotiations, you may well end up losing the deal. Try and come to an agreement on the main issues (generally the purchase price) and only then try to iron out secondary differences (settlement date, any specific clauses in the contract of sale etc.). Don’t be too concerned too early with secondary issues.

3. Don’t give away too much information with regards to your motivation in selling the property (E.g. “I’m three months behind in my mortgage repayments”). You are selling your property, and that is all the potential buyer needs to know.

4. Try to understand the motivations of the buyer. Whilst it is generally a good idea to keep your own motivations to yourself, understanding where the buyer is coming from can greatly help negotiations. Your buyer may be genuinely interested in buying your property but will only be able to do so with a long settlement, not because they are trying to secure the best possible deal for themselves.

5. Get it in writing. To avoid weakening your position by simply responding to “Would you take…” questions before having considered them thoroughly, consider telling the buyer that you will consider any reasonable offers, and asking your buyer to submit the offer in writing. This will prevent buyers from simply testing the waters with a whole lot of questions aimed at quickly establishing your bottom price.

6. If you concede something, ask for something in return. Perhaps you are willing to take a few thousand dollars less than you think you would be able to get. Consider telling the buyer that you are willing to accept this price, but only if settlement is no longer than 30 days, in the case that this settlement timeframe is advantageous to you.

7. Don’t negotiate against yourself. If you have proposed a deal to a buyer, use silence and wait for their response. If you feel the price is too high for their liking, let them be the ones to tell you that, and don’t offer a lower price until they contact you. Silence can often be a powerful negotiating tool.

8. Don’t be in a hurry. Whilst you shouldn’t ever let good opportunities be lost by not taking action in time, avoid giving your buyer the idea that you are in a hurry. They will sense that you are under pressure, and this will weaken your position.

9. Be prepared to walk away. Never enter negotiations without having other options, if at all possible. If too much depends on whether or not you sell your property at a specific time, your negotiating position will be weakened. If your buyer senses that you have other options, this will put you in a better and more stable position.

10. Don’t take it personally. If a buyer offers a price which is not acceptable to you, remember not to take this personally or necessarily as reflecting on the true worth of your property. The offered amount might simply be the maximum that the buyer is willing or able to offer on the property.