If you’re getting ready to buy or sell a house, it’s easy to get stressed about the upcoming price negotiations. How do you handle offers? Counter-offers? Requests for repairs? It can seem pretty daunting.
However, the negotiations don’t have to be stressful. After all, both parties ultimately want a successful sale! While entire books have been written on bargaining, let’s hit a few high points to make sure you don’t get bullied at the closing table.
1. Prepare in advance.
Most people think of negotiations as high-pressure moments, where power plays, shrewd moves, and witty one-liners win the day. While this looks great on TV, most of the work happens long before you submit an offer.
First, carefully examine yourself, and your own situation. What are you REALLY looking for as you buy or sell your house in Michigan? You can probably think of 100 ‘wants,’ but if you boil it down, there are probably 3-4 ‘needs‘ that will make or break the deal. Stick to the essentials, and make them your priorities as you negotiate.
Next, determine your alternatives. Is there another house you could buy in Grand Rapids? Are there other people who are willing to purchase your home? Do you know about local rentals in case the deal falls through? Is a land contract possible?
The specifics will vary based on your situation, but it is crucial to figure out your alternatives. Without a good understanding of your options, you cannot know when to walk away from a deal.
Finally, investigate the property as thoroughly as possible. Every home has both great features and potential flaws. Don’t assume you know everything based on a quick walkthrough. How are the utilities? What would it cost to repair the roof? Is there deeded access to a nearby lake? If you do your homework on the house, you can make informed choices about the price.
2. Let logic, not emotion, rule your decision making.
Buying or selling a house is a very emotional process. You’re changing your life in a big way, and it’s easy to get flustered. However, the more you rely on logic, the less likely you are to get bullied.
This is much easier if you have prepared in advance. If you clearly understand the value of comparable properties, your own priorities, and good alternatives, it’s unlikely that you’ll accept a bad deal. However, if you just go by your ‘gut feelings,’ you may lose out in the end.
If necessary, take a breath, and walk away. Take an hour in the park, or a day to cool down – whatever you need. A clear mind is a focused mind. Don’t let your thoughts get too clouded!
3. Focus on interests, not positions.
This principle is taken directly from Getting to Yes, by Ury and Patton. Remember, that prices and positions (such as “I won’t take a dollar less than $150,000!” or “There’s no way I’m offering more than $35,000!”) are derived from interests.
Everyone wants to reach their goals in a negotiation. These interests are based on needs. Perhaps the person needs to find a house in Grand Rapids quickly, because they just started a new job in town. Or they really need to sell, because they have major bills to pay off. Whatever the case, their positions (usually a stated price or demand), have root causes.
When you focus on the other side’s interests and needs, fantastic options open up. By looking past their stated positions, you can often craft creative solutions. Don’t be afraid to ask the buyer, seller, or their realtors for more information. Often, when there seems to be an impasse, you just need to dig deeper.
4. Use objective criteria.
If you’re going to negotiate a house’s sale price in Grand Rapids, you need to know its value. This isn’t based on what you believe the house is worth… it is based on what someone else will pay for it. The best way to estimate this number is to use accurate comparable houses and repair costs.
This takes time, and you may need to enlist the help of a Grand Rapids real estate professional. Really dig into the numbers, and understand the nitty-gritty details. What is lake frontage worth? How much should the age of the furnace play into the offer? What do replacement windows cost in the area? If you know your numbers, you’ll be in a strong position.
5. Don’t get greedy, and don’t get bullied.
For every property, there is a fair price range based on the situation, motivation, home, and area. Both sides usually understand this range, so you will probably be negotiating the price within a relatively small window.
If you reach a fair deal that you can live with, accept it. Far too many people have their house sit on the market for months because of stubbornness. You likely won’t wind up with the deal of a lifetime… and that is OK.
At the same time, don’t get pushed into a bad deal. Don’t be afraid to walk away (especially if you know your alternatives are better). There are other fish in the sea, so don’t choose accept a horrible deal because it’s close at hand.
Prepare well, proceed confidently, and you’ll do a great job!