More Negotiating Tactics

Flattery is perhaps one of the oldest negotiating tactics. It probably helps even in it's most obvious forms. To use it most effectively, though, subtlety is required. For example, an effective way to flatter someone is to make the compliment a part of the negotiations: "How did you learn so much about home values in your neighborhood?" Making your ideas seem like theirs, and then complimenting them on them, is another subtle approach. Of course, "I like that tie," still probably can't hurt.

The compromise is one of the essential negotiating tactics. Both sides expect to have to compromise on many points, and it is the easiest way to settle a difference. How you arrive at that compromise, though, is crucial.

For example, it is common for someone to say something like, "Look, we're only $6000 apart now. You want to $210,000, and I want $204,000. Why not split the difference and make it $207,000?" Of course, if you were offering $190,000 then "splitting the difference," would mean a price of only $200,000. That's why it's important what you do before the compromise.

Extreme initial positions help here. This can be too obvious though, so you may want to also negotiate for other points that are of little concern to you, just so you have something to "throw back in the pot" when it's time for a compromise. In the example above, you might have previously talked the seller out of keeping his prized rose bushes, just so when he hesitates over the proposed compromise, you can say, "Look, why don't you keep the rose bushes too, and we can sign this right now."

If you are having trouble getting what you need in a negotiation, keep trying. Sometimes just returning again and again to the same request can wear down the seller. He may say yes just to keep things moving along. Usually, however, it is better to try a slightly different approach on each attempt.

There are three types of precedent in the context of a negotiation. The first is your own; "This is how we financed our last home." Better is the general; "This is how it's normally done." The best is the seller's; "You said you have done it this way before."

There is power in precedent. That's why "we'll split the difference," can be used so well. People are familiar with the idea, and it is used a lot. If you are using creative financing to buy your home, for example, just telling the seller, "It's done this way all the time," can make him immediately more comfortable with the offer.

Negative precedents can be used as a negotiating tactic as well. Suppose a seller says you don't need a title policy. Say, "My aunt bought her home without title insurance, and the ex-wife of the third owner back showed up one day saying the house was half hers." He'll probably drop the suggestion.

As part of your research and preparation, take notes on some good positive and negative precedents related to the issues involved. Just remember that using the seller's precedents (if possible) is the most powerful technique.

Look for things that can create identification. People are more helpful to those who are like them,or in a situation they have been in. Dress like they do, find common interests and point them out, and point out if your situation is in any way similar to one they have been in. Every time my an old couple sees how my wife and I are like they once were, they become more open to our offers.

Make a list of other people that might help you with the negotiations, and ask them for advice or even participation. These could include contractors who can point out the flaws in a home, real estate agents who can assure the seller that contracts like this one are common, and any others you can think of.

Offer an odd amount, like $161,735. This gives the impression you know something the seller doesn't. He may think you have a good reason for that particular price.

Play dumb and ask questions. Talk slow, ask for help, and never show off your real estate expertise. Sellers are afraid to budge if they think a smarter person may be taking advantage of them.

Asking for things you don't need lets the seller later win concessions when negotiating. If you can say, "I guess I don't need the refrigerator, if I can get my price," you're more likely to get your price.

Try being reluctant. Say "Well, I don't know..." This gets the seller looking for ways to motivate you, and lets him feel like he's won something when you settle the point.

Make an offer their idea. "Are you saying you'd like a later closing, and more earnest money? Well let's do it your way, then. I just need..."

Get yeses before the offer. "What if I paid your price, but got my terms? Would that work for you?" Even with a few changes, it will be hard for the seller to say no to an offer he more or less already agreed to.

If you want to make a low offer, it helps to give reasons why. Suppose you offer $220,000 on a home when the seller is asking $265,000. He gets offended and rejects the offer. Now imagine if along with your offer, you provide a typed list of every problem the house has, and you tell him "I love your home, but my wife says we have to fix these things if we buy it, so I can't see paying full price."

Isn't the seller more likely to accept your offer in the second scenario? Now he is thinking, "I wonder if other buyers will notice all these problems? Maybe I should just sell it and be done with it." This can be one of the more powerful negotiating tactics.

Cheap Homes continues with Chapter 12 here: Buying FSBO (For Sale By Owner) Real Estate