Negotiating the Price: an Owner-Seller's Perspective POWER - ACHIEVING STRONG NEGOTIATING POSITIONS Power in negotiation is not achieved by being tough-talking or aggressive; on the contrary, arrogance may put a buyer offside to such an extent that a deal becomes impossible. However, if you project the feeling you are competent to control the process, the assumption of power may be conceded by the other party - just don't count on the mind-game to carry the perception of power all by itself. There are many factors that operate in combination, A powerful negotiator: is success-oriented - sets a reasonable target, has a clear idea of the value of the property, and is optimistic of success. has high self-esteem - easier for a person who behaves with dignity and integrity. has put time and energy into preparation. speaks with greater authority / knowledge than the other party. understands the other person's position and motivations, and tries to involve them in a win-win outcome. is decisive. will not be bullied. is not emotionally involved is not absolutely committed to the deal going through - is prepared to walk away from a deal that isn't satisfactory, and therefore does not always play it safe. has an alternative - 'All power to Plan B!' PREPARATION It is sometimes said that the best tools for negotiators are alternatives and information; you have the advantage of possessing detailed information on the property for sale, but you also need to have authentic knowledge of: market trends for this class of property in this area - a depressed market need not be impossible. the particular buyer's needs, expectations, motivations, financial viability. your own feelings about outcomes - how important is this sale? what concessions are you prepared to make? at what point would you feel obliged to terminate negotiation? PRICE Your negotiating power is stronger if you have an accurate and unbiased assessment of the property's value; buyers feel more comfortable with negotiation if the seller has a firm idea of the asking price. 'Market Price' means that the asking price is as close as possible to an honest assessment of a fair price in line with local market conditions.Some experts advise that your asking price should be about 10% more than what you are prepared to accept, so that there's a little wiggle-room for offers - and you never know, you could get lucky. Sellers should resist the temptation to overprice, as this will keep the property on the market for longer than they'd like. Some owners unwittingly overprice by giving too much weight to improvements - generally such costs will not be fully recovered at sale. Others think that overpricing pays off, with the idea that interested buyers will make lower offers from which the best can be accepted. This approach may effectively block many potential buyers from ever seeing the property, as they are looking within the lower price bracket to which the property more properly belongs. Overpriced properties are also at a disadvantage on the market because: they are competing with better but more realistically priced properties , and suffering from unfavorable comparisons. they will be subject to a string of time-consuming lower offers. they may be on the market for too long, and attract tedious questions about this from buyers further down the track. A property which is priced properly: attracts more 'qualified' buyers, i.e., those looking for a purchase at the level in the market that they can afford. tends not to attract lower offers, but may be subject to higher offers in a 'sellers market.' sells more quickly, saving both time and mortgage payments. Vendors might ask themselves these questions about their pricing policy: Is my asking price influenced by my financial needs? my original purchase price? recent local sale prices? Is my property competing with many others in this area? How does it compare? Have any of the others been on the market too long? Why? Have I made improvements that will add value? Are there some that won't? Do I hope to make a profit? Do the benefits of moving balance favorably against pricing my home at the market price? TERMS AND CONDITIONS Sometimes a sale hinges on factors other than just the agreed price - for example, Contingency Clauses are designed to protect buyers from possible future problems; the two most commonly encountered are: the subject-to-finance clause - allows a buyer to make an offer to purchase before you know details of projected financing terms. the subject-to-inspection clause - allows a buyer to modify an offer if not pleased with the results of a professional inspection. - a wide range of other such terms and conditions exist, and vary from place to place. Concessions may include: buyers may offer rent-back arrangements at attractive rates. sellers may agree to remedy problems revealed by the building inspection. One of the most frequent causes of contention between seller and buyer revolves around Non-fixture Items listed as items included in the sale e.g., items such as curtains, appliances, and small pieces of furniture. Items that are permanently attached are generally included in the sale as a matter of course, but may be specifically listed as exclusions in the sales contract. KNOWING THE BUYER It's important in any negotiation for the two parties to understand and appreciate what each wants from the process. It's generally considered to be more productive to work from known interests and desires rather than from stated positions, as this approach allows negotiation to remain flexible enough to entertain a wider range of alternative possibilities. In this instance, the owner-seller should try to understand these sorts of things about potential buyers: issues that are important to them - what they really like, want, need. (Try to find out about these things before negotiation begins - they may be less willing to open up during the process.) possible cultural values that need to be taken into account. how they intend to finance the purchase, and financial limits. areas where concessions could be possible. just how interested they are in your property. their timeline. their likely reaction if negotiation appears to be about to fail. Attempts to find out about such things should be undertaken in a friendly spirit of give-and-take - no doubt there are plenty of questions buyers will want to ask about the property and your own expectations, and honest answers to these will help develop the empathy required to achieve a conclusion satisfactory to both parties. On the other hand, exchanges of information also have strategic significance - there may be some details which are nobody's business but your own, and in the interests of maintaining your negotiating advantage these should not be divulged.