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Wednesday, July 31, 2013

5 Secrets to Successful Power Negotiating

Whether you're buying a retro mid-century mod lamp at a flea market or negotiating on the purchase of a gorgeous mid-century modern house on a beautiful lot with an in-ground pool, there are certain strategic elements of negotiating that can help you achieve your goal.  For the purpose of this article, I will be referring to negotiating strategies that win in real estate, but try out these principles the next time you're at Scott Antique Market, or Macy's for that matter.
 
What is your goal??  The obvious would seem that you want to get the property (or product) at the best possible price and terms.  In other words, we want what we want, when we want it, and we want to pay as little as possible for it.   Right?  Maybe there's more to it.   Here are my five strategies for successful power negotiating in real estate.
 
1.  Aim for a Win-Win.  That means, you win and the other party wins.  Everyone is happy.  Better yet, everyone is thrilled.  If your negotiating can make you and the other party thrilled, wouldn't that be awesome??  I can tell you as a Real Estate Broker, when both Buyer and Seller are happy with the deal to purchase a home, the rest of the stuff from contract to close goes much, much easier and things will fall into place.  When we allow others to win and ourselves to win, we are spreading good vibes.  A ripple effect is generated that spreads out in every direction.  Good will is established.  The ultimate secret for effective negotiation is to achieve this win/win.  
 
2.  Be nice, be respectful.  Come with an attitude and mindset of respect for the other party.  If the other party is selling due to undesirable circumstances that have happened to them and they need to sell or have to sell, be compassionate.  Yes, these circumstances will allow you to potentially negotiate a better than market deal, but be aware that the other party is hurting and your interest in purchasing their home (or product) will be of help to them, while you are getting a great deal.  If your negotiating method is one of "taking advantage" of someone else's misfortune you might be a bully.  That negative energy will come back to bite you right on your ass, eh, behind.  Do you believe in Karma?   I do.   Plus, bringing a spirit of cooperation and respect goes a lot further in getting you what you want than an attitude of "it's my way or the highway".  Know what I mean?
 
3.  Know your market.  Be armed with solid information.  Know your stuff.  If you are buying a house, your Realtor should be able to help you determine what the market value is based on the most recent sales of similar properties in the neighborhood.   When I get offers on my listings that are lower than the asking price, I supply information to the Buyer that let's them know that we have priced the property according to the comparables and we know the value of the property is there.  On the other hand, if I represent a Buyer and we are making an offer on a property that may be priced a little too high, I respectfully request from the listing agent to provide me with the comps he or she used to price the property since I cannot find information that supports the Seller's asking price.  If the listing agent cannot come up with solid supporting information, it makes a darn good argument that the property is priced too high.  It's difficult to argue with facts.  Logic usually trumps emotion.
 
4.  Know your limits.  Know what you can afford and what you are willing to pay.  These days, multiple offers (aka bidding wars) are not uncommon.  If you are interested in buying the hottest new listing in the neighborhood that just hit the market for $500,000, understand that the seller is not going to negotiate much off the price right off the bat.  If there is another offer (or even several other offers) my advice is to offer the most you are willing to pay for the house with the most favorable terms you can possibly give the seller and that if you win the bid, you would be delighted with the home purchase and if you don't win the bid, you would be happy that you didn't offer any more and that you can happily move on to the next property.  Don't get caught up in being competitive or emotional if at all possible.  Multiple offers on a property is a pressure cooker situation for all parties, and it's easy to lose your focus if you're not careful.  No one wants the buyer to win a bid only to have buyer's remorse.  It is also a bad idea to be competitive to win a bid with a "strategy" to take the house off the market and then try to renegotiate terms when you have the Seller by the short hairs.  Remember what I said about Karma biting your ass??
 
5.  Don't get too emotionally involved.  It is easy to get caught up in the emotional high of a major purchase such as buying a home.  After all, it's not just a "thing", it's a lifestyle change.  It is a grand experience!  Buying (and selling) a home is emotional for all parties (with the exception of dealing with corporate relocation or a bank sale), but if you get too emotionally caught up, you will lose your negotiating power and you may make poor judgments about important factors that you should consider.  This goes for both Buyers and Sellers.  Sometimes, if a Seller is too emotionally attached, they will be unrealistic about the value of their home and potentially screw up their best offer, only to realize their mistake after losing valuable time and money.    The biggest mistake I see from Buyers is when Buyers purchase new construction.  It never ceases to amaze me  how Buyers' eyes will glaze over when they spot the shiny new appliances.  They become hypnotized from the intoxicating fragrance of the polyurethane vapors that arise from the newly finished hardwood floors and seem to miss the glaring power station that sits just behind the retention pond adjacent to the back yard.  Until it comes time to sell and that new house smell is replaced by a litter box and worn carpet that the baby threw up on.  And the power station and the retention pond are still there. 
 
In the words of the great country crooner, Kenny Rogers, "you got to know when to hold em, know when to fold em.  Know when to walk away- know when to run".
 
Thanks for reading my blog.  I'm Jackson Bass with Keller Williams Realty of Buckhead and I LOVE REAL ESTATE!

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