Business Management

Negotiating Real Estate: Are You Trying to Win Deals?

34 Articles Written
negotiation tips for auctions

My husband Dave and I just returned from a week of vacation in Mexico. As I tried to use my rusty Spanish with various locals I thought back to a decade earlier when I had spent several months backpacking around Guatemala and Central America. One of my past times during that trip was to practice my Spanish as I bargained for Mayan souvenirs or fresh fruit. My goal was to pay the same price as a local.

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I was having fun playing this little game until my new Australian friend witnessed me in action, bargaining for a beautiful hammock. As I was walking away because the vendor wouldn’t lower her price a little more, my friend said, “You realize that you are getting all worked up over what is about 10 cents. At home, you would pay 50 times that much for a hammock like that, so this is a great deal.

I suddenly felt a bit silly. I felt even worse when I was unable to find another hammock quite like that one for anywhere near the price I had negotiated with that one vendor.

To this day I regret not buying that hammock.

But that whole incident helped me learn an important lesson that I try to remember when doing real estate deals.

The lesson I learned: as soon as your negotiation becomes about winning, it becomes emotional.

Even if you think you’re looking for a win/win deal you’re probably really looking for a win for yourself and if it works out that it’s a win for the other party – great! But the word “win” does funny things to us as humans. It makes us feel competitive and it makes us a little less rational.

When you get emotional and competitive good judgment goes out the window. Emotions in real estate will cause you to enter a bad deal for the wrong reasons (greed and fear of loss are the two deadliest emotions that will lead you into bad deals). And, if you’re emotional as you try to negotiate the best deal possible you’re quite likely to miss out on a good deal too.

I was trying to win by “buying at the same price as a local,” just like many people negotiating real estate deals try to win by selling at the absolute highest price or buying at the absolute lowest price.

As a buyer the best thing you can do to remain cool when you negotiate is to run your numbers before you make an offer. We do our best to figure out what would be a good deal before we enter the negotiation. Then we don’t focus on winning the deal we focus on putting together a deal where the numbers work.

Yesterday we made two offers on two different homes. In both cases it’s the deals will work for us if we pay something in the $280,000 to $290,000 range for the homes (or less of course!!). If either seller comes back to us with a counter offer of $290,000 or less we’ll accept. We could try and squeeze a few more thousand out of them but at $290,000 the deal makes sense for us.

We don’t feel the need to try to force the seller to take just a little bit less unless there is a good reason to do so (for example, after an inspection turns up major repair issues we will always go back and ask for a price reduction because we haven’t factored that surprise issue into our budget).

The point is simply that we’re not trying to WIN at negotiations. We are putting together good deals. That’s it. And thinking that way helps us minimize the amount of emotion we feel during an negotiation. And hopefully that helps us avoid sitting around 10 years from now regretting the deals we walked away from like I regret leaving that beautiful blue and black hammock with the vendor in Antigua, Guatemala.

Image Credit:© Jara3000 |
    Jeff Brown
    Replied over 8 years ago
    We should compare war stories some time. Dad used to call it, ‘lookin’ through the wrong end of the telescope’. If this post is one of just a handful BP readers take to heart, it will make a measurable difference in their success rate.
    Julie Broad
    Replied over 8 years ago
    Love that saying!! We definitely should compare stories sometime – that would be fun! Thanks Jeff. Happy New Year!
    Replied over 8 years ago
    I had to laugh at the negotiation over ten cent part. I’ve done the same thing when I was in china. I was trying to buy a fan for 15 RMB (about $2) and somewhere during the process I felt like a Jerk. Although, I did get it for 16 RMB. But hey, if she is willing to sell at that price she must made money somehow.
    Julie Broad
    Replied over 8 years ago
    Well I am happy you didn’t walk away like I did!! 🙂 Happy New Year!!
    Joel Owens
    Replied over 8 years ago
    Yes I practice emotional control in all aspects of my life. A controlled mind is a clear and focused mind.An emotional one is confused and cloudy when trying to reach an objective. When I first went into real estate the trainer would role play with us.I remember dealing with him as an irate homeowner.He was all calm until I mentioned the commission and the listing price.He took the contract and crumpled it all up and started yelling and screaming and stomping on the paper after he threw it to the ground. I let him call down and picked the paper up and smoothed it out and asked calmly what part of the contract specifically he wanted to talk about.We did a fun role play as well with parties blowing up at closing. The goal was to get used to dealing with the nightmare situations so that the small more normal stuff would be like child’s play. In my martial arts we also use psychology to help deflate a situation.You definitely don’t want to lose a deal over a few K. We have a saying “pigs get fat and hogs get slaughtered”. If you are too greedy you will get burned later on with Karma or lose out on deals all together.
    Julie Broad
    Replied over 8 years ago
    What great lessons you’ve shared!! Thank you!!! Great saying too!!
    Replied over 8 years ago
    great post – love the hammock-as-symbol. we all have stuff like that in our past – seemingly-minor regrets that symbolize something bigger, and that never go away. ah well. we learn.
    Julie Broad
    Replied over 8 years ago
    The important thing is to learn … everything else is worth the journey if we learn from it!! Thanks for your comment.