You Should Base Your Negotiation Strategy on the Seller’s Actions: Here’s Why

by |

There have been a couple of different threads this week on the forums concerning negotiation, and more specifically the offer/counter-offer process. Folks want to know how much to offer relative to their ceiling. Is it wise to low-ball and come up, or is it better to shoot it straight?

Or perhaps there is another way. Let’s talk about this.

Two Approaches

There are two ways to think about a negotiation. Some people see the process as a mental and psychological exercise: a game of a sort. Others — and I tend to belong to this camp — feel that a straightforward approach is better, as in, here’s what I think this thing is worth, and here’s my offer. If we are really close, I’ll do my best to work with you. But no games.

Does it Even Matter?

The thing to understand about negotiations is that it is less about making someone to do what you want and more about leading them to make that choice on their own. In other words, the opposing side’s frame of mind is of utmost importance. Successful negotiation is a function of you being able to recognize their speed and direction — and being able to match it!

Related: The Top 5 Ways to Negotiate Major Discounts On Your Next Property

As such, the seller’s attitude tees up the strategy behind your negotiation, which means that it really doesn’t matter which of the two methods you prefer. It’s not about you and what you like; it’s about them. The boat is moving, and you’ve got to jump in and row in the same direction if you hope to get anything done…

Conversation With J Scott

On Sunday afternoon, at exactly 4:02 p.m. according to my phone, I called my BFF Brandon Turner. You know, just to say hi and tell him I miss him.

He didn’t pick up… again. Sent me a text that he was too busy with the Superbowl festivities to talk to his friend Ben Leybovich. Funny, Serge S is never too busy for me… makes you think!

Anyhow, I was about to feel rejected. But then at 4:26 I received an email from J Scott. After a few emails we ended up on the phone talking about a bunch of different things, and at one point I told him that I submitted an LOI for some apartments in a great state of Arizona, and that I’ve been instructed by the broker in very clear terms to pursue a strategy of “playing the game.”

I told Jason that I hate that. I like to be able to tell people where I stand and let them make a decision. I like to say to people, Here’s what I can pay, and here’s how I arrived at this. No gimmicks, no games.

But the broker, who is clearly more familiar with the situation, clearly told me that the seller wants (or needs) to play. I told Jason that the broker instructed me to make an offer that he thought would get accepted and then re-trade based on inspection. Dirty, dirty game we play in REI, but everyone does it. This is why I get outbid so often. Everyone offers full price — or close to it — and then re-trades significant margins.

Oh well, the game it is! The LOI is 35% lower than the asking price. And at that, it is an OK deal. However, to really make sense, we need to knock off about 15%. We think we can do it if the LOI gets accepted. But that’s the key: until we get an accepted LOI, we have nothing. So we play the game…

Related: How I Negotiated a 30% Price Reduction and Saved $100,000… During a Bidding War


A successful outcome of a negotiation is a function of the meeting of the minds. Where the seller’s mind is at the outset of the negotiation has to dictate the strategy you pursue. There’s more than one way to Rome, and roadblocks of the seller’s psychological conditioning often prevent us from taking the highway. Fine — I’ll play along, and you should too.

P.S. I’ll tell you more about this if the deal goes anywhere…

What do you think: Do you agree with my negotiation philosophy? Do you usually play along with the seller’s game?

Leave a comment, and let’s discuss!

About Author

Ben Leybovich

Ben has been investing in multifamily residential real estate for over a decade. An expert in creative financing, he has been a guest on numerous real estate-related podcasts, including the BiggerPockets Podcast. He was also featured on the cover of REI Wealth Monthly and is a public speaker at events across the country. Most recently, he invested $20 million along with a partner into 215 units spread over two apartment communities in Phoenix. Ben is the creator of Cash Flow Freedom University and the author of House Hacking. Learn more about him at


  1. Troy Harbin

    Great post BEN This is such a timely topic, basing my negotiation strategy on the sellers actions. As I meet and talk to more sellers it seems that it true, they are all rowing at different speeds and in different directions,.Each having his or her own destination. Being a straight shooter like you, I really don’t want to play games. Yet realizing that there are many roads leading to the same place, maybe sometimes it absolutely necessary. Although most seem to be emotionally attached to the property. And that in itself gives them and inflated view concerning the value and yet finding that sellers mindset is for me most important. That and how can I possibly help.

  2. I, too, prefer to offer a fair price for the condition of the property and not to play games. However, in the past few years, I have been really uncertain how to negotiate at all. Most of the properties are foreclosures and I am trying to negotiate with an unknown entity many states away who gives no response other than “accepted” or “rejected”. Do you have any suggestions?

    There have been properties where they have very unrealistic expectations. Rather than accept my offer, the property was pulled from the market and placed in a large pool of properties. The next month it was offered on and ultimately sold for less than I had initially offered. (I was not the buyer since I was on a cruise that week and had uncertain internet access.) I am just not sure how to play this game.

    • Ben Leybovich

      Michelle – the only way I’ve ever been able to get anywhere with a bank is through personal relationships. I don’t buy SFRs, so I can’t offer much perspective aside for – throw wet noodles at the wall and see what sticks. Place lots of offers…

      Thanks so much for your comment!

  3. An honest game played with calculated wagers is usually the mark of a professional and knowledge usually outplays a few slick moves for the most part so I think I’d like to keep it simple and not make moves that the numbers don’t like.

  4. Josh McNicoll

    As a newbie REI, I’m curious about the after-inspection negotiation. After you are in the driver’s seat and have the property under-contract, what if the inspection comes up with few issues of concern? If you haven’t already gotten in at a good price prior to inspection, it seems like it could be a tough spot to be in. Also, inspections are expensive–$400 and up it seems these days. If the seller doesn’t budge based on the inspection, you could be out the inspection costs AND the earnest money.

    A little additional explanation on this would be really helpful. I think it is a fascinating topic and I really would like to understand it more deeply.

    What are your thoughts?

    • Jennifer T.

      @Josh McNicoll, it is pretty standard, at least in my area, to write in the contract the earnest money will be returned if the buyer wants to back out of the deal after inspection. There is a time limit attached…usually the buyer has to back out within 5 business days of the inspection. Though, yes, they will still be out the inspection charge.

  5. Josh McNicoll

    Correct me if I’m wrong, but shouldn’t the inspection uncover material defects with the property for you to be eligible to receive your earnest money back? I am still a bit fuzzy here.

    Also I think it might not be good for one’s RE agent and personal reputation if deals kept falling through post inspection.

    Although the driver’s seat IS a great place to be in.

    Thanks for responding earlier, Jennifer:)

  6. Rachel Leonard

    Hi Ben. Thanks for the interesting article. I also find that cultural differences come into play when negotiating. I’m Australian and we like to be direct and not play games but I’ve spent time in Asia and it’s totally different there. Everything is haggled over and it’s expected that you don’t pay asking price even when buying something cheap at the market.

  7. benjamin cowles

    I feel cut short here. All I got was ‘to know whether to negotiate or play straight ask the broker (if they have knowledge on the seller)’. That’s okay Ben as your blogs for the most part are nice and lengthy and informative. But good to know you like to be upfront most of the time.

  8. ryan rogers

    Love this topic all!

    I think you have to get a feel for the seller and see what they like. Most people like to “haggle”
    It makes them feel more involved in my experience.

    For example: have you ever sold….say….a watch to someone? Could be any object. Car, sunglasses etc…

    You say it’s $100 dollars. INSTANTLY…they say, “you got a deal” Hands are shaken.

    Even though the sellers got there price. They ultimately feel a little cheated, even though they got what they asked for. They’re usually are going to feel like they left something “on the table” or “why did accept so fast?”by your INSTA acceptance.

    Sometimes people just want to feel they had some power in the negotiation 🙂

    Have a great day BP nation!

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here