In our last segment we talked about the different kinds of negotiating styles that you’re likely to be up against when you buy or sell your home. Today we’ll talk about some of the ways you might respond when faced with certain negotiating styles so you can negotiate the best deal possible. If you want to take a quick look at the last segment to refresh your memory about the different negotiating styles, click here.

Before we look at some possible responses, keep these general negotiating rules in mind:

• Rule 1: Leave your emotions and ego out of the negotiations. They’ll hurt you more than help you.
• Rule 2: Look at the negotiations as a business transaction. Yes, you’ve got a lot of fond memories of your home, but you’re not selling your memories. They’re yours to treasure. You’re selling your property. Your goal should be to get the highest price possible.
• Rule 3: Everything should boil down to price and closing date. Light fixtures, appliances, etc. can all be assigned dollar values. Don’t be THAT person who loses a great deal because of a dishwasher.
• Rule 4: It’s good to have an idea of where you want to end up before you start negotiating, but don’t get stuck on a number because you might find yourself stuck on that number while the market passes you by.
• There are plenty more things to keep in mind, but if you start with these rules, you should be in good shape.

Now, here are some possible responses you can use when faced with the different types of negotiating styles that seem to appear regularly in the real estate world:

• The Lowballer: Your house is listed at $1,995,000. It’s been on the market for three days and a buyer offers you $1,700,000. The buyer’s agent might say things like “Obviously your house is overpriced because it hasn’t sold right away” and “You should take this offer because your first offer is always your best offer.” Crap and crap. Remember, the buyer’s agent is most likely working for the buyer, meaning he or she wants you to accept the lowest price possible. Don’t pay any attention to what they say. Plenty of homes don’t sell right away and your first offer is not necessarily going to be your best offer. You know your house is worth at least $1,950,000 because you’ve reviewed the comparable sales with your own agent. At this stage, you need to flush the Lowballer out and determine his intentions: Is he willing to pay a fair price and just testing the water first (this happens all the time) or is he a true Lowballer or Meet Half Way-er? One way to get a sense of this is to tell the buyer’s agent “Thank you very much for this offer. We really appreciate you and your client taking the time to put it together and we’re glad your client likes our home. Unfortunately, this offer price isn’t in the ballpark of what we’re prepared to accept, which is based on the comparable sales, so there’s no point in us making a counteroffer at this stage. If your client wants to resubmit his offer with a much more realistic price, we’d be happy to consider it.” The other option would be to give this buyer a counteroffer for full list price and deliver a very similar message. If he’s serious, he’ll come back with a much more reasonable offer. And if he’s not, you’ll never see him again and won’t have wasted a lot of time and energy negotiating with someone who wasn’t ready to pay a fair price for your home.
• The One Timer: This type of negotiator doesn’t appear that often in residential real estate because most people think that negotiating is expected, kind of like when you go to the market in Jerusalem or Florence or anywhere else in the world. When you receive a take it or leave it offer, ask yourself “How will I feel if I don’t accept this offer and never see an offer with this price again?” If you get a sick feeling in your stomach, you should seriously consider accepting the offer. One question to ask the buyer’s agent is “So what you’re saying is that if I want to sign back for $10,000 more, I shouldn’t bother because your client won’t accept it?” Watch the agent’s face closely. If you see even a little hesitation, it might mean that it’s worth it for you to sign back. Plenty of people pretend to be One Timers, but when push comes to shove, they’re willing to negotiate. How much they’re willing to negotiate is always a guess and a risk so act accordingly. Let your stomach be your guide.
• The Nickel and Dimer: As I said last time, I often equate this negotiating style to death by a thousand cuts. You can either play along and make small price moves yourself or at some point you can say “We appreciate your interest in our home, but we’re only prepared to negotiate so much. Either you want our home or you don’t. This is our price. We hope it works for you.” They’ll either take it or they won’t, but either way, it’s better to discover their intentions early. They may not want it today at your price, but may change their minds next week.
• The Last Worder: This person hasn’t read Rule 3. Their egos play a big role in their negotiations so let them feel like the boss. Try to negotiate to a point where THEY make YOU an offer for a price that’s acceptable to you and then accept it grudgingly. You’ll get your price and they’ll feel like they got the last word. Everyone’s a winner!
• The About Facer: Don’t ever say it’s your final offer unless it really is your final offer because once you do an about face you lose all credibility. When someone tells you “This is our final offer.”, reply with “Thank you for being so clear with us. Just to make sure we understand you, what you’re saying is that we either accept this offer or the negotiations are over. Is that correct? You won’t even look at a counteroffer from us so there’s no point in us making one?” If they hesitate, they may not be making their final offer so you might want to try a counteroffer. And if their final offer isn’t good enough for you, then you have nothing to lose anyways. But if you get a sick feeling in your stomach about potentially losing this offer, you might want to seriously consider accepting it.
• The Meet Half Way-er: I’m a logic guy. This strategy drives me crazy because it’s not at all logical. This type of negotiator can often be confused with the Lowballer or the Nickel and Dimer since all three tend to start out at very low prices. When I suspect that I’m dealing with a Meet Half Way-er, I’ll say something along the lines of “My clients really appreciate your buyers’ offer, but the comparables suggest that the fair market value is quite above your clients’ offering price. In fact, it’s well above the halfway point between the list price and the offer price. The sellers are interested in selling their home at a fair price, which isn’t the halfway point. If your clients are serious about buying it, I’d suggest they come back with a price that’s above the halfway point because otherwise my clients might not be interested in negotiating with them.” Once again, it’s better to uncover your counterpart’s intentions early on before wasting a lot of time and energy on fruitless negotiations.

There are a few other things to keep in mind when you’re involved in negotiations:

• These suggested responses are meant to be used in a seller’s market such as the one we’re now experiencing in central Toronto. In a buyer’s market, when buyers have the negotiating power, or when you’re dealing with a home that’s hard to sell, the roles can be reversed. As a seller, you might find that the appropriate response is often “Thank you for your offer. Where do I sign?”.
• There’s a saying that real estate agents often use. It goes something like this: “You know it’s a fair deal when both the seller and the buyer are unhappy with the outcome.” (You wouldn’t believe how many sayings we have. We have enough sayings to constitute a language.) It’s not unusual to feel some remorse after you strike your deal so don’t feel badly if you do.
• Negotiating is a fluid process. Don’t be surprised when you or your counterpart change your minds along the way. You may be fixed on one number today, but decide to change your mind after you sleep on things.

Now that we’ve covered the different negotiating styles you’re likely to be facing and reviewed a few possible responses you can use, it’s time to look at a few of the more interesting things that have happened during negotiations over the years. Stay tuned for the next installment!

In the meantime, do you happen to know anyone that can use this kind of real estate help: The kind of help that involves honest answers, straightforward advice, no pressure and being treated like family? If you do, please let me know the best way for me to connect with them because I’d like to offer them this kind of help. And as always, don’t be shy if you have any questions or comments about this post! Thanks for reading.