Strategic Tips In Negotiating Buying or Selling a Home

What truly drives me crazy, is when I see a cheesy realtor billboard saying their “Top Negotiators”.   Come on guys, do you actually believe that boasting an unsubstantiated claim will drive clients to your door.   I would say that 75% of Toronto real estate agents would define negotiations as a poker game and my response is you’re wrong.  What you have established in this tactic is, “I won’t show you my cards until you show me yours”.   The error in this thinking is:

  1. there is only one winner
  2. they take all the pot
  3. the other player loses

Any skilled contract negotiator, whether in labour, management, government, NHL, NFL or corporate knows that success only comes with the sharing of information.  This does not mean saying this is what I will pay for the house, but disclosing a small piece of information, one that does not make you vulnerable, which functions as a device to build trust and commonality.   This is where you could offer something personal, such as maybe when you looked at the house and saw picture of them sailing.  The tactic here would be say you sail as well so mention your trip to Georgian Bay last year.  What the other party will want to reciprocate and disclose something as well.  Guess what?  What you have established is TRUST and from this a common link.

The second tactic of successful negotiators is to build a hierarchy or ranking of issues.     This is a straight list of what key components in the buying or selling which are most critical to achieve:

  • Minimum or maximum price range
  • Possession date
  • Conditional upon selling your house
  • Financial approval
  • Municipal permit approval
  • House inspection
  • Termite inspection
  • Want specific personal items included or excluded in the sale
  • Home insurance

Within this ordering they are ranked, with some being must have while other are nice to get but not important.  What you established to your counter part is what you want but not how they are ranked as priorities.  From here you are looking on commonality on issues and where agreement can be made so both parties win.

Some buyers are hesitant to put in an offer thinking that they don’t want to give their position away.   As a buyer, you actually want to establish your position with an offer, as the seller has already outlined their position by putting their home up for sale.    The seller has set an anchor price with their evaluation and in addition outline possession date, exclusions/inclusions and design/mechanical updates.

Once you have established the buyer position as well as the seller’s position negotiations turn to probing how one got to that position.  Our poker player real estate agents only have one poorly executed tactic…this is our offer take it or leave.   This old trick is stupid and guaranteed to piss everyone off.   A good negotiator will calmly state how they came to their position with one or two concrete sources.   A better tactic is ask the other party, “Listen, can you just explain to me how you came up with that evaluation of price”?  Here is where you getting key insightful information which will then better position you for your response.

At the end of the day both buyers and sellers would not be negotiating if they did not want to make a deal.  So whether you are buying or selling your first negotiation is picking a realtor who brings all the tools for job and not some backroom poker player.

Here is a link to another blog I wrote on the negotiations.