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Real Estate Negotiating for Sellers: Three Key Strategies

 

For by thy words thou shalt be justified, and by thy words thou shalt be condemned.

Matthew 12: 37

Everyone wants to win the negotiating process. No one wants to be in the position of losing, including your buyer. The most successful negotiators utilize a win-win strategy. This strategy provides for meeting the needs of both parties to an agreement, allowing both to “win” in the negotiation. Let’s examine the seller side of the negotiation process and discuss some strategies that allow the seller to position themselves in their best negotiation stance.

Market Value

The first strategy is to start with a fair price. Many homeowners have adopted the stance that they should offer their home at a fairly high price, allowing them to negotiate down the price so the buyer believes they are getting a great deal. If the property offered for sale is the only one available in town this strategy might work. However, home buyers usually have choices and are not likely to spend anymore money than they have to in order to obtain real estate that meets their needs. Buyers will just find another comparable property priced more reasonably. Pricing too high gives away the negotiating power of the seller because they are viewed by buyers as unreasonable or unrealistic before negotiations can even begin. Pricing with the market sends a clear message to the buyer and their agent that the seller knows the real estate market and knows the value of their home.

The most advantageous time for the seller is when the home is first listed. This short period usually attracts the most traffic. If the price is out of line, traffic diminishes and buyer agents or REALTORs stop bringing their clients to see the property. Some savvy buyer agents will use the overpriced home as the “first visit” so that when their buyer visits the reasonably priced properties they are more likely to commit to writing an offer. If the seller has a lot of traffic but no offers, the seller may want to investigate the true market value of the home before buyers lose interest. Most over-priced selling strategies result in buyers finding other options. Over-pricing with the thought of reducing the price later still results in the loss of many potential buyers who have already found substitute properties at market pricing. Over-pricing is not a win situation for the seller or the buyer.

Selling property at a price that is to low results in a “win” for the buyer but a lost opportunity for the seller. The price should be determined by current market value. This value is determined by recent sales prices of comparable homes. Offer the property at market price allows for a “win” for both buyer and seller.

Real Estate Agent

The second strategy is to utilize an licensed agent. There are two major reasons for employing this strategy—marketing and preservation of negotiating power. Marketing is challenging work. Professional marketers spend years gaining their skills. The marketing of real estate is one of the most difficult professions. In fact, statistics show that 87% of the properties originally offered for sale by owners eventually list with a REALTOR. Preserving negotiating power is essential. It is very difficult to negotiate anything in which you have a vested interest. By selling property themselves, sellers place themselves in the position of answering buyer inquiries personally. Much of what a seller discloses to a potential buyer weakens the negotiation power of the seller. Corporations, professional athletes, actresses and news anchors use agents to represent them in the negotiation process to limit their personal involvement. Utilizing an agent places them in a better negotiating stance than if they attempted the process on their own. The major reason for self-representation is to save money. Ironically this is usually not the case.

Buyer’s Needs

The third key strategy is to determine the buyer’s needs and priorities. If you are aware of the buyer’s viewpoint and can see things as they see them, you are more likely to propose solutions and counteroffers that are favorable to your position and yet also acceptable to the buyer. A buyer with an urgent move-in date may be willing to pay more closing costs. Another buyer who wants to stay under a specific price may accept forgoing a cosmetic repair. It is wise to consider all options available that can meet the needs of the buyer while still preserving the seller’s interests.

Obtaining a win-win for both parties is essential in negotiations. By setting the price at market value, enlisting a licensed REALTOR, and determining the buyer’s needs, sellers can position themselves into an advantageous selling situation.

 

Equity Real Estate Logo

 Barry J. Preusz
Realtor | Residential Specialist

1218 East 7800 South
Salt Lake City, Utah 84094

Office: 801-993-0083


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