Negotiating Power: Who Has It and Who Doesn't

By
Real Estate Agent with Keller Williams Realty

Negotiating Power:  Who Has It and Who Doesn't

I work with buyers and sellers and one thing that many of them lack is the power and understanding of being in a position of strength when it comes to negotiating.

At the very heart of the matter is having something of value to negotiate with and below is an abbreviated list of examples of what may constitute something of valuel:

For the home buyer

  • A pre-approval letter
  • A sizeable downpayment
  • Good credit (to negotiate the best rate with yoru lender)
  • Ability to pay own closing cost
  • The ability to close quickly
  • Think like a seller and use it to your advantage
Note to buyers:  A mere expressed interest in a property does not put you in a position of strength when it comes to negotiating.
 
For the seller
  • A home that is appropriately priced (resulting in high buyer interest)
  • Multiple offers
  • A rare listing in a highly sought after neighborhood/community
  • Flexible closing cost assistance
  • Readily available routine maintenance records (HVAC, roof, electrical, etc)
  • The ability to close quickly
  • The inclusion of amenities (your high end appliances......hint, you can always buy yourself some mroe of these)
  • Understanding buyer motivation
Note to sellers:  What your neighbors received for their home (which is not comparable to your home) is not considered being in a position of strength.  Understanding of true comps will help you in the long run.
 
The overriding concept of negotiating is that each party negotiates based on valuable consideration.  In other words, during the negotiations, each party recognizes and is willing to compromise on items of value to them. The end result is that neither party may not get everything that they want, but they were flexible enough to negotiate for the most important and trade off items that ranked lower on the totem pole of importance.
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John McCormack
Albuquerque Homes Realty * www.AlbuquerqueHomes.com - Albuquerque, NM
AlbuquerqueHomes.com, Albuquerque Homes Realty

Excellent post Charita.  You broke it down perfectly that both buyers and sellers can understand easily.  I just hit the suggest tab on this one! 

Jan 06, 2012 10:13 AM #1
Rainmaker
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Jennifer Prestwich
Henderson, Thornton, Broomfield and Westminster - Henderson, CO
Your Castle RE Colorado

This is great, Charita- and I am suggesting!  I love how you address the appliances.  It always baffles me when a seller gets hung up on a refrigerator that is 10 years old...  What is more important?  Selling your home and moving on, or a refrigerator?

Jan 06, 2012 10:48 AM #2
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Thanks John and Jennifer.  Sometimes the objective really gets lost and non-issues take precedence over the things that really matter.  Understanding and staying focused on what's really important could make the process a little less stressful. I guess the term "don't sweat the small stuff" might apply and use your real negotiating power instead.

Jan 06, 2012 11:22 AM #3
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Bryan Robertson
Catarra Real Estate, Inc - Los Altos, CA
Broker, Author, Speaker

If more buyers would read this list and actually, truly believe in it and follow it, we'd get more sales done.  Buyers especially are frustrating when they think just saying they're interested is enough to get negotiations started.  NOT!

Jan 06, 2012 12:10 PM #4
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Bryan many times (more often than I'd like) I hear buyers say," well they must not want to sell" or "if they really want to sell" and that just gets under my skin particularly when the buyer really has nothing to bargain with.  For example,

  • the buyer just barely has downpayment,
  •  just barely got a pre-approval, 
  • needs to wait til next payday for home inspection and
  •  the payday after that to pay for the appraisal).
This is not what you call being in position to negotiate.

 

Jan 06, 2012 12:23 PM #5
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Elyse Berman, PA, ABR, GRI, Realtor
Realty Associates Florida Properties, Boca Raton, FL - Boca Raton, FL
Boca Raton, Delray & Highland Beach- 561-716-7824

Hi Charita,  Nice post!  I like the way you spell it out for both buyers and sellers.   One of the things I hear at times from buyers about a preapproval or proof of funds is, Oh, I can always get it.  The ones who are serious do get it and have it with them.

Jan 07, 2012 12:03 AM #6
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Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

The art of the negotiation is the ability to know who show have the power and how to change it.

Jan 07, 2012 12:08 AM #7
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Kathy Sheehan
Movement Mortgage 770-634-4021 - Atlanta, GA
Branch Manager

Well said Charita.  Understanding the process makes our jobs much easier.

Jan 07, 2012 12:09 AM #8
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Evelyn Kennedy
Gallagher & Lindsey, Alameda, California - Alameda, CA
Alameda, Real Estate, Alameda, CA

Charita:

This is the information buyers need to put them in a position to be successful buyers.  If only they would listen we would have more sales.  The same is true of Sellers.  So many times they want to take that brand new washer/dryer.  They might not even fit in their next house.  Better to leave the appliances with the house.

Jan 07, 2012 12:34 AM #9
Rainmaker
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Lanre Folayan
Keller Williams Capital Properties-Buy a home in Washington DC. Sell a home in Washington DC - Washington, DC
How much is my Petworth DC House Worth?

Charita great way of breaking it down for both home buyers and sellers. I SUGGESTED THIS ONE FOR A FEATURE ALSO.

Jan 07, 2012 10:33 PM #10
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Exactly Elyse and how do they know that they can always get it.  It's almost as if we are just supposed to take their word for it.

Kathy it seems that while the focus is on the HOUSE, people get lost when it comes to negotiating for the sale and purchase.

Evelyn unless the object has true sentimental value (such as an item from a deceased parent as an example), sellers should be willing to let it go if it is the only thing hindering a sale.

Thanks Lanre.  This is something that I think we all share with buyers and sellers. The ones who understand it are the ones that fare far better.

Jan 09, 2012 05:34 AM #11
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Lisa Von Domek
Lisa Von Domek & Associates LLC, Real Estate Broker/Associate with Real Living Real Estate Group www.LisaVon.com - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

Good morning Charita,

Well stated, the power is in the something of value and not getting lost in inane details.  

Jan 09, 2012 08:47 AM #12
Rainmaker
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Kathy Clulow
RE/MAX All-Stars Realty Inc. Brokerage - Uxbridge, ON
Trusted For Experience - Respected For Results

Charita - WHO and WHY ..... dealing from a position of strength and knowing it makes a difference when presenting an offer

Understanding the importance of "who" is in the position of power during negotiations and "why" is crucial to our buyers and sellers when they are making a decision on an offer.

Jan 10, 2012 04:45 PM #13
Rainmaker
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Stephanie/Bob The Ruiz/Miller Team
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Hi Charita, you wrote a great post.  Too bad this spam got on here.  Maybe you can get it off.

Jul 28, 2012 05:18 AM #14
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Charita Cadenhead

Serving Jefferson and Shelby Counties (Alabama)
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