CHAPTER 1

Be a Winning Negotiator

I was recently talking with a Realtor® friend of mine about a listing shewas trying to sell when she said, "Those darn buyers—I know they want theproperty, but they refuse to negotiate!"

"Refuse, how?" I asked.

"They offered low and they won't come up a dime on the price. They, in effect,are telling my sellers, take our lowball offer or forget the deal!"

"Hmm," I observed. "Sounds like they're negotiating very well."

She looked at me in puzzlement. "What do you mean? They're going to ruin thedeal."

"Maybe," I said. "And then again, maybe not. When you're in a strong position,as many buyers are in this difficult market, telling the sellers to 'take it orleave it' can be a very effective negotiating tactic for getting a low price.Provided, of course, the buyer is willing to risk losing the deal."

"So," she replied, "It's just a ploy? You think they will pop for a higherprice?"

"Your sellers will never know unless they turn it back on the buyers. They cansimply say, 'No.' Then they'll quickly learn how much the buyers really want theproperty. Either the buyers will leave, or they'll come back with a higheroffer."

"That's gutsy," my friend said. "The trouble is, it's the first offer thesellers have had in months and they're desperate to sell. They don't want tolose the deal."

"Then they've already lost the negotiations," I replied. "If they're unwillingto risk the deal to get a better price, they've already capitulated to thebuyer's lowball offer. Might as well just sign the papers and be done with it."

She nodded and said, "I'll put it in that light to the sellers. See what theyhave to say."

I later learned that the sellers did turn down the lowball offer and the buyershad indeed come up on the price. The deal was made.

Of course, that doesn't mean that this "tough" approach will work all thetime—or even most of the time—but it is a good model for one type ofnegotiating strategy.

You Can Negotiate Anything

If there's nothing else you take away from this book, I hope it's the knowledgethat anything can be negotiated. That doesn't mean you'll always be successfulin getting all that you want. You may be outclassed by the negotiator for theother side or defeated by the circumstances of the deal. But if you know andabide by the basic rules of negotiating (and we'll see them all), you should beable to hold your own with the best of them. You'll learn to do just that fromthis book.

When There's Apparently No Negotiating Room

A buyer I was talking with not long ago had a different problem. He wanted tobuy an REO (real estate owned, a property owned by a bank) that the bank hadtaken back through foreclosure. He had offered less than the bank/owner wasasking and was turned down.

He said, "I really want the house. But I can't afford the price the lender isasking and still have enough money to fix up the property—it's in terribleshape. And I was told the bank won't negotiate. So I guess there's just no wayto make the deal."

"Who told you the bank won't negotiate?" I asked.

"The real estate agent representing the lender," he replied. "She said the bankwouldn't drop below the asking price no matter what because of the amount theyhave into the property."

"Have you tried offering full price," I suggested, "and asking for money backfor fix-up work?"

He looked bewildered, so I explained. "It sounds like you don't mind the priceso much. You just can't pay it and have funds left to do the fix-up work. Sohave the bank pay for fixing it up.

"You can ask to have a certain amount of money held in escrow to be paid back toyou once you've completed the work. The bank gets full price, so the deal looksgood on its books. And you get the money to fix it up."

"Will that work?" he asked.

"You won't know until you try," I replied.

He did. And it did.

Everything Else Is Negotiable, Too!

Get the idea? Everything in real estate is negotiable. Sometimes you just haveto think outside the box to see how. Here are just a few of the things that youcan negotiate in real estate:

* The price paid.

* The terms everyone agrees to.

* Whether personal property is included, such as chandeliers and/or therefrigerator.

* Time when things will happen, for example, when the seller will move out orhow long the buyer has to get financing or an inspection.

* Who pays the closing costs. (Does the seller pay for the buyer or is it goingto be the other way round?)

* The seller's willingness to carry back a mortgage (to help the buyer withfinancing).

* The interest rate a lender will charge (to get a lower monthly payment).

* The escrow and title insurance rate charged (in some states).

* The size of the agent's commission paid (fully negotiable in every state).

* And a whole lot more ...

It all comes down to how hard you negotiate.

Is It Hard to Learn to Be a Good Negotiator?

You may be saying, "I'm not a negotiator. I don't know how!"

Actually, you can't be alive and not be a negotiator. All of us negotiate allsorts of things all the time. We learn as children to negotiate with our parentsover TV time, when we'll go to sleep, what we'll have for breakfast, whether wecan skip school—and a hundred other things.

Husbands and wives negotiate over sex, what to spend their money on, when andwhere to buy a house and how much to pay for it, where to go on vacation, whoserelatives to visit—and many, many more things.

So does everyone else. We all negotiate all the time. It just comes with livingwith and among other people.

Many of us, however, freeze up when it comes time to negotiate in a formalsetting, such as buying a house, getting a mortgage, paying an agent acommission, and so on. We somehow think we are unqualified to handle such bignegotiations. Sometimes we delegate negotiations to another person such as anagent or an...