Negotiating For Sale By Owner

How to negotiate the price from an owner seller's perspective

by Graeme Daniel

How to Negotiate a For Sale by owner

Fortunately for Australians in the business of buying and selling property, the process of negotiating a fair price is generally a low-key affair, ideally achieved through amicable discussion between vendors and buyers over a cup of tea and a biscuit, or possibly several cold beers and a bag of chips.

However, although some people seem to have a gift for negotiation, it doesn’t come naturally to all of us – indeed, in our culture, some people are inclined to pay the asking price in order to avoid the possible conflicts involved in arguing for a better deal. In these cases, some token to-ing and fro-ing may be acceptable by way of demonstrating that we aren’t absolute pushovers, but serious haggling doesn’t seem to be worth the risk of revealing our inadequate negotiating skills.

It is this common aversion to serious negotiation that third party agents exploit in their bid to sell services and expertise; their promises to negotiate the best price for sellers from a steady stream of cashed-up buyers can be very tempting. Unfortunately their primary interest lies in achieving a quick sale in the interests of turnover, rather than in optimising the seller’s price at sale.

Agents do not need to be good at negotiation, and many aren’t. However we feel about doing our own negotiating, there are many good reasons for giving it a go – most of them may be measured in dollars.

The Stakeholders: Vendors, Agents and Buyers.

Traditional Real Estate Agent In Australia

Buyers

Owner Selling Privately

As a vendor taking the ‘For Sale by Owner’ option, you enjoy these advantages:

  • You have an intimate knowledge of the property for sale.
  • You are directly accessible to potential buyers, and can easily maintain communication throughout dealings with them.
  • You have total control over what information buyers receive (motives for selling and other personal issues are sensitive items over which you may wish to exercise discretion).
  • You are focused on getting the best outcome in just one transaction.
  • You are in control of the negotiating process, and ultimately responsible for outcomes.
  • You are in the best position to advance your own best interests.
  • You avoid the stressful conflicts and hostilities which often develop during the course of a vendor-agent relationship.
  • You feel better at the end of the day, because you did it your way.
  • You save the costs of agents’ commission and promotional services.

However, there are also downsides not easily ignored; at the most basic level, the owner-seller is at an emotional disadvantage – after all, the idea of selling the family home probably entails some emotional baggage, which should not be allowed to inflate pricing expectations or colour judgment in negotiation.

And then there’s the process of negotiation itself – you may feel that you’ve had no prior experience in this, though in reality past daily experiences and observations have already provided plenty of real-life examples to draw upon. Maybe some of these ideas just need clarification and a little order to pull them into gear.

It can be useful to look at the negotiating process in terms of:

  • Power Factors – developing strong negotiating position.
  • Preparation – things to do before negotiation.
  • Pricing – the asking price; the role of price in negotiation.
  • Terms and Conditions – beyond the price.Knowing the Buyer.
  • Communication – no negotiation can survive without it.
  • Questions – to ask the buyer, and some to expect in return.
  • Strategy – a few plans for action.
  • Tactical considerations – dealing with the ups-and-downs.
  • Concessions – may be necessary for a successful conclusion.
  • Implementation – offers and contracts.
  • Patience – widely held to be a virtue, but…Negotiating the Price: an Owner-Seller’s Perspective

Power Factors – developing strong negotiating positions.

Preparation

Price

Terms and condition

Knowing the buyer

Communication

Question Time

Strategy

Tactical Considerations

Concession

Implementation: Legal Stuff

Patience Is A Vertue

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