| Negotiating the Price: an Owner-Seller's Perspective |  
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| COMMUNICATION |
In this sort of communication, seeming to be highly articulate may be discounted as gift-of-the-gab salesmanship, and treated with a degree of suspicion. A more down-to-earth approach is less threatening, and likely to put people at their ease. Points to note about communication:
- The reciprocal sharing of information requires some level of trust and a desire to cooperate.
- Courteous communication works better
- A little give-and-take inspires confidence in the process - negotiation doesn't have to be a zero-sum game, where one side's win means that the other side has to lose. Outcomes can be win-win.
- Nonverbal communication can be important - this is a large subject beyond our scope here, but worth following up.
- All serious offers and counter-offers must be in writing.
A few hints:
- Never play the sympathy card, i.e., citing marriage breakdown, financial crisis, bereavement, threat of repossession, bad tenants, terrible neighbours. Victims are generally seen to be at a disadvantage and in a weak negotiating position.
- Don't use phrases such as 'quick sale', 'need to sell', 'can't wait to get the mortgage paid off', 'doesn't flood all that often' - don't even joke about it.
- Don't take offence at unfavorable comments from buyers - they may be trying to talk the price down, or it may be just a nervous case of needing something to say. If they really don't like it, they won't be back anyway.
- Beware the overfamiliar stranger - maintain a certain reserve for a better negotiating position. The aim of the exercise is not to make a lifelong friend, though if it happens, so much the better...
- Only accept an offer you are completely comfortable with. Verbally negotiated points of agreement are not legally binding and should be backed up by signed written statements. However, until a comprehensive written agreement is reached, you have every right to be considering other offers as well.
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| QUESTION TIME |
Some questions to ask potential buyers:
- Have you compared values in this area?
- Are you prequalified or preapproved for a mortgage loan?
- What length of settlement period do you hope for?
Questions to expect from buyers:
- How long has the property been on the market?
- Have there been any offers?
- Why is your price higher/lower than others?
- How much commission are you saving by selling privately? (unanswerable: the rate of commission is public knowledge, and the amount will depend on the sale price)
- Is there anything else I should know? - could lead to specific questions about topics such as easements
- ... and the BIG ONE:
- Q: Are you prepared to sell for $X?
- A: All reasonable offers in writing will be considered.
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| STRATEGY |
Methods of conducting negotiations, sometimes referred to as 'negotiation protocols', range from informal telephone, email and kitchen table events through to more formal encounters; negotiating property prices, terms and conditions tend to occur at the informal end of the scale. The first ground rule to be agreed upon between seller and buyer is determining just how and where subsequent negotiation will take place.
It has been suggested that there are no rules in negotiation, but there are certainly a number of commonly cited procedures, strategies and techniques to consider:
Sellers tend to have the final say in establishing the protocol:
- Some will ask buyers for their best offer, and try to steer them closer to their asking price from there.
- When a seller receives multiple offers, the highest bidder may be identified by asking for a 'final and best' offer from each. This practice shortens the negotiating period and eliminates the stress of arguing every offer backwards and forwards individually.
- A variation on this strategy is to introduce a deadline as well, with no opportunity for buyers to increase offers after the set time. Deadlines carry the risk of limiting the number of available offers, and you probably can't try this often for any given property without word getting around about your less-than-final proposal.
Sellers are generally advised to start with the highest price they think the market will bear, and work down (as opposed to auctions which start from a low price and work up). The same principle operates in negotiating terms and conditions - start with the best possible situation for yourself and be prepared to concede on some points if necessary.
On the other hand, buyers' offers generally start low, and first offers from buyers should not be considered their final word - if they're serious, they'll reconsider and make a more realistic bid.
There's no rush to consider offers. You may feel the need to consult with family or trusted independent advisors before responding immediately. Again, if a verbal offer appears reasonable, ask for it in writing.
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| TACTICAL CONSIDERATIONS |
Objectivity is an important principle in negotiation:
- Personal considerations are not relevant - you may not approve of a buyer's style, attitude, apppearance or morals, but a lasting relationship is not at issue here.
- Use objective criteria where facts are under discussion - average prices for property in a given category and location can be fairly easily found or figured out.
- And once again, focus on interests, not positions.
The KISS principle, mentioned in the Photography article in relation to design, can also be applied to selling property - in these terms, Keeping It Simple may mean accepting less money as a trade-off against the complexities involved in competing deals which, though offering more money, will mean more headaches.
Settlement terms can be a complicated minefield best left alone until the basic negotiation on transfer of ownership is completed.
Knowledge of a buyer's timetable can be used to advantage - a better offer may be forthcoming if the buyer's residence has been sold and the deadline for moving out is approaching; people often make concessions under this sort of pressure. Your property may be the closest fit and the buyer's best option under the circumstances.
However, if you are depending on this sale to finance your own move, your time constraints may drive you into the position of being prepared to accept a lower offer - probably a case of 'Mum's the word', though what she'd have to do with it is not yet clear.
If you just need to slow things down for a while, perhaps to allow more time for other offers to appear, the claim to need to refer to expert opinion is always handy - perhaps this is where Mum comes in.
Sincerity in negotiation doesn't mean absolute exposure; both parties need a Plan B, a clear sense of alternative options which is not divulged to the other party. The ultimate weapon available to either party is the willingness to walk away from an unsatisfactory negotiation; the one most willing has the stronger position, but once the plug is pulled, it's hard to get the water back.
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| CONCESSIONS |
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Plans for making concessions should be in place from the beginning, but they need not be seen as set in stone - negotiation is a dynamic process, and both the nature of possible concessions and the way they are implemented can change in response to evolving circumstances. For example, if a buyer evinces a particular passion for the antique garden gnome you've always hated, save him up as a concessional item to be used later in the negotiation - but don't just give him away. If possible, concessions should not be given away, but rather traded one-for-one between seller and buyer.
Concessions may be traded as often as is required to keep the negotiation moving forward; larger concessions are typically made as deadlines loom - another case for Mum.
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| IMPLEMENTATION: LEGAL STUFF |
It's important to know these things:
An Offer:
- may include a date by which it lapses if not accepted.
- may be subject to a finance clause, i.e. bank approval, sale of an existing property or other considerations such as a builder's inspection.
- may be conditional on certain items being included or excluded from the contract. Any such special conditions must be written into the contract.
Once an offer is made in writing, it is up to the vendor to decide whether or not to accept it, or whether to give other parties the opportunity to increase their original offers. During the time that a vendor is considering offers, the property remains on the market.
An offer is not legally binding on both parties until the buyer and seller have signed a contract.
A Contract contains:
- details of the property (address, legal description)
- the sale price
- deposit paid
- settlement terms.
The vendor is under no obligation until the contract is counter-signed by both parties.
We recommend employing a solicitor or conveyancing officer to help with the legal requirements, as conveyancing law is complex and changeable; mistakes in this area can cost you the sale.
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| PATIENCE IS A VIRTUE... |
Patience has been a recurring theme in readings for this piece - here are a few examples:
- 'Persistence pays. Stick at it beyond the point of boredom.'
- '... listen and require to be listened to...'
- 'Don't be disappointed when things don't go as well as planned - there's always another buyer'
- ' Missing out is not a life-threatening situation.'
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