Scottsdale Luxury Real Estate (480) 888-5355 Office (480) 585-7070
Negotiating an Offer

Offer Strategies:

  • Sellers, who net the most, approach the negotiation using the principles of reciprocity and objective criteria. No pressure tactics. No artificial deadlines. It's okay not to win every point in the negotiation. Focus on the goal. Don't get caught up in the sconces and garden furniture.
  • Avoid the use of the word "Firm". Very few offers or counteroffers are firm.
  • If you're a buyer or seller, you can always decide when you have reached your last counteroffer without announcing it is "firm". It may be as effective to say, "That is as high/low as I feel comfortable offering based on the comparables available". Place the burden on the recently sold and competing properties rather than on the seller's property or buyer's offer.
  • Address any issues upfront. If there is an issue you hope will not surface, it will. A right of first refusal, a buried oil tank, easement, deed restriction, water in the basement etc. If a buyer discovers these on his or her own, the seller loses credibility.
  • The key to a successful negotiation is communication. As long as there is communication, you have an opportunity to influence the outcome and to change the rules of the negotiation.
  • You do not have to like whom you are negotiating with and you can promise yourself you will never deal with them again. If you have more to win than lose in a negotiation, it is in your interest to negotiate.
  • Spend time thinking about your counterpart's best alternative to a negotiated agreement. Buyers and sellers often make the mistake of assuming they have a better alternative than they do. A seller assumes there will always be another buyer. There will, but when, at what price, contingencies and terms?
  • The buyer assumes there will always be another property. The property they are about to lose, however, meets all the requirements in terms of size, architectural style, condition, location, amenities, etcetera. There is not always a better alternative. However, the buyer may still choose not to negotiate with a seller who may have been inconsistent in their dealings.
  • What is their approach to negotiating? When you negotiate, you're negotiating with an individual or a group of individuals. Each with their own personality and negotiating style. The individual's decision-making process may be very different than a stereotypical view of how decisions are made.
  • If you find you are making behavioral assumptions about a buyer or seller based on their background, age or business experience, and/or financial wherewithal, you may be heading down a dead end path. It is far more probably that your negotiations will be based on the underlying value of the property.
  • A property with three price revisions, in six months, tells a different story than three revisions over 3- years with three different listing brokers. It's likely; the first seller has made the emotional and financial decision to sell. The second seller may have made the emotional decision to sell, but the financial decision may be lagging.
  • By having as much information available as possible, a seller can tailor their counter offer to more closely meet buyer and seller objectives. A counter only addressing price may be less successful than a counter that seeks to uncover the underlying motivation behind the buyer's offer.
  • A buyer or seller may refuse to counter based on the distance between their offer and the difference between listing and anticipated selling price. They refuse to negotiate. This should not end future rounds, but it does necessitate that one or both sides reconsider their positions.
  • Refusing to negotiate can be a tactic. With appropriate supporting arguments, it may be successful.
  • In any negotiation, a buyer or seller's success will be closely tied to their credibility. If a buyer submits an offer they know will be declined, the buyer may have lessened their ability to negotiate from strength.
  • When you make a threat, you are almost inviting a counter threat. You are intentionally or inadvertently escalating the exchange and probability there will be no sale.
  • If a buyer or seller has locked themselves into a "money position," try to give other issues importance. Focusing on contingencies, earnest money or a closing date may create the opportunity for face-saving,
  • If you've done your homework, you will know going into the negotiation, the pivotal issues. You can decide what issues to address in the initial offer or counteroffer and what issues are best addressed after you have reached agreement on minor points. It is more productive if both parties are invested in the negotiation.
  • A useful exercise is to map out a strategy based on three or four different strategies that may be advanced by the other buyer or seller. This approach forces flexibility in thinking. While unlikely the other party will use any of the strategies., you will be prepared to work through alternative strategies.

Arizona Real Estate
Russ Lyon Sotheby's International Realty
7669 E. Pinnacle Peak Road Suite 1110 • Scottsdale, AZ 85255 (480) 888-5355 • Office (480) 585-7070

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