Whether you’re selling a house or trying to buy one, learning to negotiate is a skill that’s worth your while to learn.
I’m far from an expert negotiator, I’ll be the first to tell you that.
But I have learned a couple things over the years, so today I’m sharing some of the things I’ve learned over the years that may help you out.
Related: How to Make Your House Standout In the Detroit House Market
Let the Other Person Make the First Offer
Couple months ago, while speaking with a home owner in Southfield, we asked him how much he wanted for the house.
His reply? “Make me an offer.”
I couldn’t help but laugh, because it made me think that he knew a little something about negotiating.
My point, is that it’s to your advantage when you let the other person make the first offer.
This allows you to set the medium point.
A lot of the negotiations we’ve had ended up somewhere around the medium point established the first round between us and the people we’ve done business with.
Why it Works
Gives You Control
It gives you some control early in the negotiation process.
Let’s say I was looking into buying your house.
And let’s say I asked you how much you wanted for your house.
Let’s say you say, “$100,000,” for the sake of round numbers.
Now let’s say that I don’t plan on spending any more than $80,000 for your house.
What I could do, is strategically set my counter-offer at a price below $80,000, so that we could both meet in the middle where I hope we end up, which is, you guessed it, $80,000.
So I tell you, “$60,000.”
There’s a good chance that we’re going to go back and forth, until we end up where I wanted to be (hopefully), at $80,000.
Keeps You From Losing Money
Now there’s a “second” reason why this help you, too.
Let’s stick with the example from above.
Let’s say that you, as the seller, me make the first offer.
If you do that, you can cut yourself out of some money.
If you go first, there’s always going to be that chance that my offer would’ve been more.
And you’ll never even know if you go first.
Better than what you were looking for in your head.
Think about it.
Let’s say you wanted $50,000 out of the house in the back of your mind.
By you letting me go first, you let me make my opening bid at $60,000!
If you would’ve went first, and said $50,000, you could’ve missed out on at least $10,000!
Let’s move on.
Don’t take this the wrong way, but just shutting up can help you tremendously.
It puts a feeling of awkwardness, but you want to do this on purpose. It can help the other side adjust their price without you saying anything.
So if I offered you that $60,000 on your home, and you wanted more, you might not even need to say anything. Just say nothing whatsoever.
That awkward silence on the phone might make me say, “OK, OK, I can go $65,000.”
With me knowing how this goes, I know how to just sit there too, so I’m less likely to give-in on this tactic, but it’s a tool to add to your arsenal, and it’s helped me quite a bit.
The More You Know…
“The More You Know…” remember those commercials that used to come on tv?
Anyways, it’s not just a good slogan. It’s a pretty good negotiation philosophy, too.
Let’s say you’re trying to buy a house from someone.
The more you know about the house, and the situation the home owner is in, the better your chances are of negotiating a price that’s good for both parties.
And especially your self.
That’s what it’s all about. At least in my opinion.
It doesn’t have to be about getting the “upper hand” on the other party.
Yes, “leverage” is a major part of negotiating, but that doesn’t mean you have to use that leverage to do the other party in.
Anyways, back on topic; that’s part of the reason why it’s important that you do a good job of estimating repairs.
It does more than just help you bring repairs to the attention of the home owner that they may not know about.
It improves the chances of the transaction being fair.
It improves the chances of both of you negotiating on a property that both of you are in the know about, from a repairs standpoint.
But that’s just my opinion.
I’ll finish up on this one in part two, I have to run for now. Talk soon.
Do you have any negotiation tips to offer? Sound-off in the comments section below.