Issue Date: August 17, 2005

While Negotiating, Check Your Emotions

By Jody Zink
Licensed Realtor in Ohio & Michigan

Real-estate transactions are one of those times in American life where some form of negotiation seems to be the norm. Like driving, most people truly believe they’re great at it. Practice certainly helps and being prepared with the right information is key. Often, however, it’s Mr. Buyer trying to impress Mrs. Buyer with his knowledge and looking to get a “steal.” A brief marital spat could ensue during this time, while the real estate agent wonders why psychology training was not required to obtain her real estate license. Here’s an example.

Mr. and Mrs. Buyer spent months looking for the house that fits their needs perfectly. It’s the house they’ve been dying to find: charming and move-in ready with just the right amount of space. And the price is much lower than they planned to spend — bonus! (They were planning to spend between $140,000 and $150,000.)

Time to write the offer. This home is listed at $132,000. Their real estate agent, representing them as buyers, has provided them with a Comparative Market Analysis. This report compares the home they’re interested in to similar ones that have recently sold in the neighborhood. This CMA shows the average selling price for homes in the neighborhood to be between $118,000 and $124,000.

Get ready. Negotiation is about to be attempted by Mr. Buyer.

Ignoring information given to them by their agent, Mr. and Mrs. Buyer make an offer of $100,000. Mr. and Mrs. Seller, irritated at the lowball offer, counter at the full list price, $132,000. Mr. Buyer, still confident he can get a “deal,” makes a second offer of $105,000. The Sellers do not budge from their $132,000 price. Suddenly there’s word the Sellers are expecting one, possibly two, more offers. Mr. and Mrs. Buyer increase their offer to $130,000 and also need help from the seller toward their closing costs. Consider this: A realistic offer early on may have been accepted by Mr. and Mrs. Seller, especially since the information provided to them by their Realtor showed the $118,000 to $124,000 range to be reasonable. Given this scenario, Mr. and Mrs. Buyer would be paying $6,000 more than they need to.

The sad ending is that after months of searching nearly 100 homes, Mr. and Mrs. Buyer lost the house, outbid by a competing offer. It would have been much simpler to negotiate realistically before competing buyers were added to the mix.

I’ve seen how a transaction can be stopped in its tracks over mere pennies and over-confidence. Like driving, the business of real estate can sometimes bring out the bad side of people. A seasoned real-estate agent recently told me that more times than not, “Residential clients don’t realize they need you.” It’s clear that clients often convince themselves they’re self-sufficient. And some of them are. Those who aren’t and think they are, however, can add unnecessary stress to an already overwhelming process.

Jody Zink is a licensed REALTOR in Ohio and Michigan with the Loss Realty Group. Her column appears every other week in the Toledo Free Press. She can be reached at jody@jodyzinkrealtor.com or 419-725-1881.