It’s easy to get wrapped up in a negotiation – the potential to get a good deal, or just “win” the property – but there are some common traps to avoid. Here is Danielle's list of top nine negotiation mistakes that nix deals and erode finances:
- Focus too much on the dollar
Sure, you want the best deal, but a focus on the all-mighty dollar means you miss other aspects of the deal such as closing date or repairs. That isn’t to say the dollar doesn’t matter - the bottom line is still there. But you can compromise on price in exchange for other concessions. For example, Realtors will sometimes suggest making two offers: one “as is” and one agreeing to higher price in exchange for painting the property or undertaking other renovations.
- Don’t look at both sides
You don’t want to be that person who tries to scrape every last penny off the table for yourself. You do want to get the best deal, but pushing too far could hurt market value and future deals. It’s the golden rule of business: "leave something on the table for the next time".
- Stereotype the seller
Get the inside scoop on the sellers: “Why are they selling? Did they already buy something? Is it a new build? When is the closing date for the new place? Do they have a strong sentimental attachment to the home?”. Style your negotiations based on what you know – appealing to a seller’s emotions, or their business side depending on their situation.
- Reveal your hand
So you know all about the sellers, from their kids names to their new address – but you can lose your advantage if they know as much about you. Make an offer as soon as you enter the home? Reveal your excitment to he sellers or their agents? That says you’re emotionally attached or desperate, and could make the seller stick to their guns.
- Miss details in the process
Know what you're buying and make sure it is included in the offer. Is the hot tub coming with the house, how about that great shelving unit? Make a list and ensure that everything is on it.
- Let emotion get in the way
Take your personal emotion out of the deal. Think business … If you want the seller to work with you, show flexibility and consider their wants before yours. You will be more likely to get what you really want this way.
- Get obsessed with “winning”
If you get the property, but at a rate you can’t afford or with conditions that don’t help you, that’s not really a win. Have other properties that you’re interested in so it’s not a must-buy situation. The best leveraged position to be in a position to be able to walk away from the property. If you can do that, you’re in a position where you don’t need them, they need you.
- Counting your chickens before …
Don’t assume you’ll win, especially in a multiple-offer situation. You’re better off looking at properties that have been on the market a while where the owners will be willing to compromise.
- Not listening to expert advice
Your real estate agent and other advisors have seen a lot of deals so if they give you an estimate on how high a purchase price can go, it’s worth listening to :)