6 million homes were sold in the United States in 2019, and the number of home sales in the United States has been rising since 2011. It might have faced a slight dip in 2020—thanks to COVID-19—but it is expected to go right up again.
Millennials are looking for homes with a fervor never seen before. Today, they make up for the biggest cohort of home buyers. But whether you’re a millennial who’s buying—or a boomer who’s selling—you’ll need an arsenal of negotiation tips to light your path.
After all, everyone wants the best deal for themselves.
You Don’t Speak First
If you’re a Breaking Bad fan, you’re going to love this one—because we’re going to use the example of a dying (fictional) Chemistry teacher negotiating his way through drug dealers. And we’re going to use it because the show does a brilliant job of explaining how successful negotiations work. Whether it’s in this instance, when Walter White meets a psychotic drug lord, or the now-famous Say-My-Name sequence—it’s always the other party who speaks first.
And the party that speaks first almost always loses.
Of course, real estate isn’t exactly the empire business—we’d still caution you to follow the same rule: do not speak first. What you’re doing by letting the other party have the first word is this:
- See the offer they’re willing to make.
- Change your offer or mind in accordance with the offer they’re willing to make.
- Gauge their willingness to negotiate.
- Get a starting point from where you can comfortably reach for a higher price—and you know this point is comfortable because you know what the other party has in mind.
Letting the other party speak first gives you the upper hand in a transaction. You have the starting point in sight—one which you didn’t propose. You can take advantage of this fact.
So let’s suppose the other party voices $50,000. You know that this is the price you have to negotiate around—not the $30,000 or $70,000 that you had in mind. You now know that you can bring the price lower to $40,000 because the other party has already told you that—if not in words.
And in some rare, fascinating cases, the first offer the other party makes turns out to be the offer you were looking for. Either way, it’s a game of chess. You need to decide your negotiation strategy based on the first move your opponent makes.
Don’t Mention the Negatives Right Away
Let’s say you’ve done a thorough survey of the house, and you have the inspection reports and a repair cost estimate on you. You might be tempted to quote a lower price and cite all that’s wrong with the house.
We would say: tread carefully. Go with quoting low, of course (if you’re buying), but do not mention why your quote is so low straight away. Wait and watch if the seller understands. They, too, know what’s wrong with their property. They, too, have seen the inspection report.
However, once they begin to antagonize you and raise objections on the quoted price—that’s when you begin pointing out the flaws. And here’s a pro-tip for when you do that: don’t just bunch it all together. Name every defect in the house—from cracked paint to broken fence—number by number. Enumerate. A small wall crack might not be as big a problem as a leaky faucet—but together, they are two problems. Enumerating in this manner makes your claims look even more valid—because they make the house look extremely shoddy.
Don’t Beat Around the Bush
Be as direct and as straightforward as you can. If there’s something you’re looking for specifically or something that you have in mind, voice it. Don’t leave the opposing party hanging. Don’t keep them out of the loop—nobody likes that. A negotiation doesn’t have to be a tug of war. It also doesn’t have to be dragged out for no reason.
Long, drawn-out negotiations become very irritating for both parties and might do more damage than good. Ask for what you want, and you shall—or shan’t, depending on whether or not the other party has it—have it. If you feel like the offer the opposing party is making is too low or too high, just tell them after some attempts at negotiation. Don’t dilly-dally and don’t draw it out.
Walk Away When You Have to
Part of real estate negotiations is all about knowing when you must walk away. All deals and offers can’t be to your liking. They can’t all be perfect, and you will have to walk away from a couple of these before you find the perfect one.
We would also say that you keep your options open—regardless of whether you’re buying or selling. Keeping multiple options ensures that you can walk away from a deal that doesn’t sound like it’ll benefit you.
Whatever you do, never rush to a decision. You might love a house you’ve just walked into, but if the offer doesn’t sound beneficial, you need to walk away—or make it work for both of you. Take your time before you make a decision—and consider all angles.
Additionally, sounding too satisfied or interested in a deal can also embolden the opposing party to make an offer that you will want to refuse. We aren’t telling you to kill the excited human inside of you, but it’s better to keep your emotions under check when you’re negotiating. If you like something, don’t say so—we mean, don’t jump into the air and dance a jig outright. Consider everything else, give the opposing party some time to revisit their offer, and then pour your heart out.
While most of the other tips on this list might only work some of the time, this one works all of the time—without fail. It’s quite foolproof. You do your homework before going to real estate negotiation class. You know the market value, the repair costs, the history of the house, and so on. Once you have everything you could possibly need, you have the upper hand in any kind of negotiation.
You can start by looking at local real estate listings and public records. Finding out about the homes around the one you’re looking at also helps. Hire a professional for a home inspection. Get a repair cost estimate to know exactly what kind of a budget you’re looking at.
Also, be sure that you’re asking a lot of questions, such as: why is the opposing part buying/selling? What compelled them? If they’re selling, then they must be buying—what are their options and choices? If they’re buying, then they must have looked at other houses—what are their options, and what have they looked at so far?
The information that you acquire from your real estate research will be the fuel that ignites your negotiations.
About the Author
Phillip Fehler is a realtor from Fayetteville, North Carolina. He has been assisting people with relocations, real estate investments, buying and selling property, and listings for the past 10 years. His experience in real estate negotiation is extensive, and he believes that a lot can be gained through the right negotiating strategy.