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Tuesday, March 19, 2013

Negotiation Strategies in a Changing Real Estate Market

Negotiations do not always succeed.   Think about labor management negotiations.  Sometimes there are strikes.  Think about athletes who are negotiating new contracts. Sometimes they end up leaving for another team.

And in each case the negotiation strategy failed. 

In a changing real estate market negotiation strategies shift. There was a time when sellers were happy to get any offer.  Now with shrinking inventories and less competition sellers will likely become more demanding when negotiating offers.

There are ways to negotiate and reach your goal as well as ways to negotiate to fail.  As a buyer (or seller) you must decide what your strategy will be before proceeding.

I advise buyers to determine, if possible, a seller's motivation and then offer a price that will not offend but will get the conversation started.   Ultimately buyers must know the most they are willing to pay and be ready to walk away, if necessary.

Sellers, similarly, must know what they are willing to take for their home and not dismiss the initial offer.  I have been involved in cases where the first offer was ultimately the best offer ever.

Here is the key consideration whether buyer or seller - negotiating requires knowledge of what other options are available if success is not in the cards (other properties, likelihood of a new offer, time lines, etc.).

Finally, negotiation is not an adversarial process.

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