Negotiation Doesn’t Have to be Adversarial

Quite often, price negotiations turn into very adversarial situations where one party tries to get “the upper hand”.  There seems to sometimes be a feeling that you can “win” a negotiation by getting your opponent into a situation where he will be somehow harmed if you were to pull out.

This comes about because buying and selling homes not only have a financial component but an emotional one as well.  The buyer is buying because he needs or wants a new home, and the seller is selling for the same reason.

Perhaps your existing residence is too small for you growing family, or perhaps it’s too big now that the kids are grown. Perhaps the economy has put you in a situation where it’s tough to keep up and you are moving to get more control of your finances.  Or perhaps you have a new job which comes along with a new commute.

There are lots of reason why you might need or want to move.   Here’s the thing, though. None of those issues has anything to do with the value of the house you are trying to buy or sell.  The value is the value.  So when you begin negotiating you need to do so strictly from a point of view of what the house is worth.   If you can’t afford to buy a certain house, or you can’t afford to sell your house for less than a certain amount – then you should not be doing it.

Your emotional and family needs are important when deciding where and when to move, but once you start negotiating, all that stuff needs to go on the back burner.

A successful house negotiation will not have a winner and an loser.  It will be a mutually beneficial business arrangement where both sides have a fair result.

Whether you are  the buyer or the seller, your Realtor, should begin the preparation for negotiation, exactly the same way – by using market data to determine the fair value of the house.   If both Realtors are doing their jobs correctly, there should be very little difference in the perception of the home’s value – whichever side you are on.

In a perfect world, everyone would get together in a room and look at all the available data, come up with the right price and that would be that – but we all know that it doesn’t work that way.

The buyer and the Realtor will, together, come up with two numbers.  The highest price you are willing to pay and where you will start the bidding.

The seller, who has already, in a sense, put in the opening bid by setting a list price, needs to prepare with his Realtor by doing essentially the same as the buyer.  Decide exactly what your lowest price will be and what your first counter-offer will be when you receive the opening offer from the buyer.  The list price, unfortunately kinds of goes out the window at this point.  The list price is designed to attract shoppers. Now you need to get down to business and decide how much you are willing to take for your house.

Since conversations between Realtor and Client are confidential, these numbers will not be shared between the two sides.  If done properly, however, “what I’m willing to pay” and “what I’m willing to sell for” shouldn’t really be too far off.

Then an opening offer is tendered, there is a series of counter and counter-counter offers and a price is settled on.  At the end of it, there shouldn’t be any negative feelings about the number from either side since the ranges were decided ahead of time.

Homebuyer Tax Credit Passes Senate

The Senate last night passed an expansion of the tax credit proposal. The proposal would be available to all purchasers (not just first-time homebuyers). The key elements are:

• A tax credit in the amount of $15,000 or 10 percent of the purchase price (whichever is less), with the option to utilize all in one year or spread out over two years

• The tax credit is available to all purchases of any home from date of enactment for one full year. Able to claim the credit against the 2008 tax return

• Buyers must occupy the homes for two years as their principal residences

• Purchases of homes by investors are ineligible

• Terminates the previous $7,500 Housing Tax credit on the date of enactment

Sources indicate that the Senate is likely to pass its entire Stimulus Bill by this week-end. The House and Senate will then have a conference next week to work out the differences.