Negotiation Tips
Few offers will be agreed in the first round. When conducting negotiations it is important to remember that both parties need to feel that they have won. If the other party is allowed to become entrenched in his position, it will become very much more difficult to achieve a satisfactory solution. There are many techniques that can be used to diffuse the hostility of a negotiation.
Ask the Purchaser to Justify his Offer
Almost every estate agent in the country can tell you a story about a sale that fell through because the two parties could not agree about the value of a garden shed, an old piece of carpet, a wooden toilet seat or something equally ridiculous.
The danger of conventional negotiation techniques is that they are highly confrontational. All too often such negotiations become deadlocked because both parties are too proud to concede another round. This is an emotional, not a rational, response but it could easily cost you a sale if you let it.
A much better way to negotiate is based on the simple principle of asking the other party to explain how he arrived at his offer. You might achieve this by writing a letter to him along these lines:
Dear Mr Jones,
Re: 27 The Avenue, Anytown.
SUBJECT TO CONTRACT
Thank you for your revised offer of £95,000. In my last letter I showed you how I arrived at my figure of £97.000 by reference to two comparable properties in the immediate area. I wondered if you would be kind enough to let me know how you arrived at your figure of £95,000. I do hope that we will be able to reach an agreement and I look forward to hearing from you again soon.
Yours sincerely,
P Smith
The buyer must respond with some sort of justification for the offer that he has made. This should ensure that future negotiations remain based on factual rather than emotional issues. This technique can be used again and again through subsequent rounds of the negotiations and can play an important role in preventing the negotiations from becoming deadlocked.
Trade Concessions for Concessions
It can be very dangerous to ask the other party to concede something without giving something in return. You should always be on the lookout for an opportunity to trade a concession for a concession. For example:
- If you will pay an extra £1,000) I will agree to take the property off the market immediately.
It is important to realise that the value of the concession need not be equal to the value of what you are asking for in return.
Offering Non Financial Concessions
A non-cash concession can often have a disproportionate value to the other party. For example, by moving out one day sooner you might be able to save your purchaser from paying a whole month's additional rent. It is therefore well worth trying to find out about any requirements of this nature that your buyer might have. These might include:
- completion date
- completion periods
- exchange date
- removal of the property from the market
- fixtures and fittings
- carpets and curtains.
By making concessions in these areas you might well be able to avoid deadlock and/or secure a valuable negotiating advantage.
