Negotiations: How Good Are You?

Thanks again for taking the time to read this blog. I really enjoy writing and real estate, and these seem to go hand-in-hand when blogging. Anyways, back to the matters at hand... No pun intended... actually, pun intended.

Let's get a couple of things out of the way first, just so we can be on the same page. You are probably not that great of a negotiator. Maybe that is why you are reading this. Negotiating is just like any other skill set—it is learned over time through practice and repetition. I think of it like a quarterback in football having the ball given to him ("hiked") and then subsequently throwing it to a receiver, again, and again, and again... Well, you get the point, right?

Or maybe you are a great negotiator, and if that is true, then you would also know what your weaknesses as a negotiator are. That is part of the profession and a large part of what makes us great: we are honest with ourselves. My biggest flaw, not only in negotiations but in life, is when I am not honest with myself, and more importantly, God. "Andre! I don't believe in God!" If you don't believe in God, that is fine; just ignore that part and be honest with yourself. It will save and make you time and money. Now back to negotiations.

Here are a few simple tips for sellers and buyers when entering a negotiation with another party:

Control the Time

There are two vital parts of our economy on the table for every negotiation: time and money. Often, the latter overshadows the former. Money is more attractive because it is instantaneous; it blinds even the best of us from doing what is in our best interest. What I mean, simply, is this: money can be replaced; time cannot. Always remember this.

Time in negotiation is always working for you or against you. A good negotiator knows this, and when you have someone representing the sale of your home, make sure they know this as well. Part of the Washington State Purchase and Sale Agreement, which is the contract used by most people in the sale of their property to a buyer or buyers, is a portion commonly called the expiration date. When the buyer makes an offer, they give the seller a certain amount of time that the offer is valid, only requiring the seller's signatures for the contract to become a commitment between buyers and sellers. After this time, the buyer can walk away, and if the sellers then sign (after expiration), the buyer is no longer obligated to that initial commitment.

In this housing market, almost every agent who has ever submitted an offer on a property when I was representing the seller calls me, talks over the offer, and then says, "Ya know, this offer has an expiration of {Insert date/time}," to which I respond, "Thank you," and then go silent, waiting for them to give me more information on their buyers. You see, to me, expirations mean nothing. A motivated buyer will hang around past expiration and make the deal happen. An unmotivated buyer will walk. In both instances, the seller wins. I don't let agents push my clients around with unanchored time frames or false premises. If you want to do business with us, you will be willing to stay and work with us; if not, we don't want to work with you anyway because experience tells me you are going to be a pain through the entire process.

Here is my brief list of time pressures you can use:

1. Let the Offer Expire: This is one way to test the buyer's motivation for how much they want the property.

2. Radio Silence: Acknowledge the receipt of a buyer's offer, then go silent for several hours. This is extremely frustrating for the buyer's agent; however, those hours often work in favor of the seller. The buyer's agent's reaction to this silence can offer up a good amount of information on the buyer's willingness to be flexible in price and terms.

3. Weekend Warrior: There is an open house scheduled for the weekend; the buyer submits an offer the day before. Most likely, they know there is an open house. Leverage the open house for a higher purchase price or better terms. "The seller likes your offer but really wants to go through the open house...." Open houses account for maybe 5% of all sold houses. The chance that it sells at the open house is minimal. BUT, buyers don't know this or don't care; they do not want to have to compete with another offer or risk losing the house.

4. Time Will Tell: I cannot count the number of times I have had an agent reach out to me about an issue or challenge. Why do they call me? They want my client to help figure it out. Guess what? 99% of the time, it is not my client's job or responsibility to do that for you. What I have learned is this: give it time. I often don't answer them right away because they want me to figure it out for them. I'm not going to do that unless it is absolutely necessary. As I abide by this principle, what I have discovered is within hours, or days, or weeks, they figure it out themselves without needing to involve my client AT ALL.

Much of negotiations are about perception. What do I perceive versus what does the other party perceive? How can I use their perception to my client's benefit? What are their weaknesses? What are the other agent's actions disclosing to me?

For more insights on real estate negotiations and the Washington State Purchase and Sale Agreement, you may find the following resources helpful:

• Washington Realtors
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• Demystifying Real Estate Deadlines
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• Offer Expiration Date Explained