How to Negotiate an Offer

If you’re buying or selling a home, negotiating is by far one of the most important things to be able to do. In fact, being a strong negotiator is an absolute necessity. If you don’t know how to ask for what you want, you’ll never get it. And, of course, you can save yourself a lot of money in the process.

Negotiating Tips

Have a strategy

A smart negotiator always has a strategy. Start by assessing what you stand to gain from the negotiation proceedings. If there is no advantage to you, then don’t negotiate. For you to be successful, there has to be something to win. Once you are clear on what it is you hope to achieve, keep this goal in your mind—at all times. This will help you remain focused and on target, even when dealing with difficult people.

Research, analyze, and clarify

A strong negotiator knows the hand he/she is playing. For example, it is not a good idea to try to set a price that is currently too high for the neighbourhood just because you think you can make more money. This tactic will send prospective buyers running for the door. However, if you’ve researched how much homes in your area are selling for or have had your house appraised, you are in a much better negotiating position. You will have concrete evidence as to how you derived your figures. In addition, it is imperative that you listen carefully to what the other side is offering. Many negotiations fall apart simply because one side or the other doesn’t understand exactly what is being put on the table.

Have realistic expectations

Whenever you are in a negotiating situation, it helps to remain flexible and open. This includes maintaining realistic expectations. It is rare that you will get everything you want while negotiating. Think about what you are willing to give up and what are absolute deal breakers. When selling a home, be honest and upfront about any damage or flaws a buyer may point out about your house. Discuss these problems, and let the buyer know they are welcome to have any perceived damage or defect inspected—at their own cost. If there is indeed a problem, offer to reduce your asking price to help offset the cost of repairs.

Have an alternative deal waiting

Another helpful tactic is to prepare negotiations with one party while having an alternative deal on the backburner. Chances are, one of the deals will close, and you will be in a stronger position to walk away if the original proceedings begin to breakdown. Even if the alternative isn’t ideal, you are still prepared to go there if necessary.

Pick a comfortable setting to negotiate from

In order to avoid being intimidated by anyone, and to maintain power and control in negotiating situations, it is a good idea to prepare the setting. When you’re comfortable and confident, it’s easier to start negotiations in a winning position. Think about where you want the negotiations to take place, who you are negotiating with, how to best present your case, and the timeframe you are working within.

Mentally prepare yourself

Finally, the key to reaching a satisfying agreement is to prepare yourself mentally. The right attitude is the main difference between successful and unsuccessful negotiators. Remember:

• be tough, but professional
• remain objective and unemotional
• stay calm and relaxed
• keep focused

What to Do if You Receive a Low Offer

There is always the chance that you will receive a low offer. Here are some things you can do to make the most of the situation.

Do not take it personally. This will only make you look weak while negotiating. Try to understand the buyer’s motivation. You may learn something important, even if you ultimately reject the offer. Make a counteroffer. Consider the buyer’s position and reduce your asking price, or explain how you arrived at your current asking price. Negotiate other terms to counterbalance a low offer.  If you come within $10,000 of each other, it makes sense to split the difference.

Remember, the longer it takes to sell your home, the longer you have to drag out the process—and pay the mortgage. It might be worth your while.

Negotiating can be tricky, but with a little preparation and confidence you can succeed!  

Checklist: Negotiating Process

• Set your goals, including your selling timeline and minimum acceptable price.
• Decide whether to negotiate online, on the phone or in person.
• Develop a negotiation strategy, including concessions you’re willing to make.
• Plan how you’ll develop counter-offers.
• Request to see potential buyer’s pre-qualified or pre-approved letter from a lender.
• Accept a final offer.