According to former FBI hostage negotiator Christopher Voss: “Successful negotiation is not about getting to ‘yes.’ It’s about mastering ‘no’ and understanding what the path to an agreement is.”
Voss may have more experience with crisis situations than selling houses, but his sage advice translates just the same: strategic compromise is at the heart of any successful negotiation. Without it, you’ll find it difficult to break through even minor disagreements that could be solved with a little give and take. What’s your plan for when a buyer says “no” to your home’s price or protests your closing timeline? Where are you willing to budge?
When tensions rise at the bargaining table, fall back on these proven house negotiation tactics to take stock of your priorities, evaluate your options, communicate effectively, and find the path that ultimately takes you to the closing table.
Tactic #1: Ground your negotiations against pre-set priorities
When you walk into a negotiation, you should already know what you hope to get out of it. There are three main variables at play for home sellers:
- Your bottom line
What is the minimum dollar amount that you must get for your property to cover your mortgage debt, prepare for retirement, and cover your down payment on a new place?
- Desired speed of sale
Another factor to consider is your timeline. Do you need to sell your home as fast as possible due to job relocation or sudden life change? Or have you got weeks to spare? Typically a time restriction on the sale will require more compromises.
- Current real estate market conditions
Position your priorities in the context of the real estate market. Low inventory and surging buyer interest put the power in your hands. A surplus of homes on the market equals increased competition, meaning you’ll have to more seriously consider buyer requests.
- Your bottom line
With your priorities laid out in front of you, Harvard negotiation experts who wrote the book, Getting to Yes: Negotiating Agreement Without Giving In, suggest that you should enter every negotiation knowing your Best Alternative to a Negotiated Agreement (BATNA) or Plan B. Your BATNA marks the threshold at which a compromise or concession would be worse than the alternatives available to you if you walked away.
When you sell a house, you could have a number of BATNAs to choose from, such as: take your house off the market to renovate it and try to sell it again later; leave your house on the market to wait for other potential buyers; rent your house instead of selling it; or invest in professional staging to bring in more buyers.
Here’s an example of how your BATNA serves as a negotiating tactic:
You’ve decided that your bottom line on price is $255,000. If you don’t fetch at least that price for your house, you’ll cut into the funds you’d planned to use for a down payment, which would then likely require you to pay private mortgage insurance on the next residence you have your eye on.
After a number of back-and-forth offer negotiations, a buyer makes what they say is a final offer of $248,000. Your agent suggests investing $1,000 into decluttering, cleaning, and home staging to command a higher price point rather than take the offer. In that case, your BATNA—invest in $1,000 with the hopes of commanding your full asking price—is more attractive so you reject the offer in favor of your best alternative.
Tactic #2: Take stock of your bargaining chips in case of emergency
Once you have a solid understanding of where you won’t compromise, you’re ready to come up with a list of “deal sweeteners.” Think of this exercise as taking stock of your bargaining chips—those items you could potentially use (or concessions you’d realistically make) that aren’t a big deal in your mind but could be just enough to convince buyers to say “yes” to the deal.
These sweeteners allow you to hold firm on price, timing, or whatever you’ve decided are your top priorities without bringing negotiations to a halt.
“There are other things besides price that are negotiable, so when you are negotiating the contract, consider how items like personal property, fixtures, and furniture have price tags that you need to look at as well,” said Julie Kaczor, a top-selling agent in the Chicago suburb of Naperville.
Take a good look around your house and try to see it through the eyes of a buyer. Which furnishings or bonus items would a new homeowner potentially enjoy? If you have researched your property’s selling features—like a multi-thousand dollar stereo system, or even a pool table—you’ll be better-prepared when negotiations get tough.
For example: Say you’ve decided that you are going to turn to your BATNAs unless you get offered $400,000. You receive an offer of $390,000, and rather than reject it outright, you decide to counter: If the buyer will raise it to your minimum acceptable price, you will include your house’s high-end furniture or stereo equipment (that is worth equal to or more in value than the price difference).
Kaczor said this type of negotiation is more common than you might think. She noted a time when a potential buyer asked for high-end speakers as part of a deal and her “seller’s knee-jerk reaction was ‘No way.’” However, in the end, the seller realized this package deal was how to get what they wanted.
“If you are open to it, personal property is a swap out for some dollar amount in price,” said Kaczor. “But you can’t take a pool table to pay off your loan, and it might have value for one person and not the other.”
Real estate marketers talk about these flexible alternatives because they can mean the difference between sellers walking away with a deal in their favor, or moving on to someone else.
In addition to house-related items, other common seller concessions include covering a portion of the buyer’s closing costs or offering a home warranty. Alternatively, you could compromise a bit on price and in return request that the buyer give you a flexible move-out date or agree to a leaseback deal, in which you live in the property for a certain time frame while you search for your next residence.
Tactic #3: Use deadlines to create a sense of urgency, but cushion your requests in soft language
If you price your home correctly from the start, then you might find that the first offers you receive are the best ones. As the offers start rolling in within hours or days of your property hitting the market, one tactic is to let everyone know that your house is a hot commodity, and if they want it, they need to act quickly. This is where setting a short time limit for offers or counter offers comes in.
Kaczor and other top agents say that’s it’s completely reasonable to ask for an offer or counter-offer to be sent within a couple of hours after a buyer expresses interest in your home. This is important when you have an open house and more than one person says they’d like to make an offer, or if you have a bidding war on your hands.
However, you don’t necessarily want to alienate buyers or make them feel like they don’t have the chance to review their options carefully. That’s why you should cushion your deadlines with soft and approachable communication techniques. For example, Kaczor recommends presenting your suggested timeline in the form of a softball question like:
“Do you think we will be able to get your answer within a couple of hours?”
By phrasing the question as a request rather than a demand and offering the other parties enough time to think things over, you’ll be less likely to spook any buyers with too much pressure upfront.
Tactic #4: Be prepared to back up your asking price with cold hard facts
John McKee, a business coach and author, says that being armed with facts to counter what the other side in a negotiation might try to present or argue against is the key to getting what you want and communicating your position without appearing unreasonable.
So the more you know about your home and what it’s worth from every angle, the better prepared you’ll be to defend your position. It’s much easier to diffuse a disagreement over price, for example, when you have a comparative market analysis in front of you that explains why your house is worth more than Mr. Smith’s down the block.
With remodeling receipts and pictures showing your homes more desirable open layout, you can justify a higher price with unbiased research, rather than an emotional claim that your home is simply worth more. You can bet that “Just take my word for it!” won’t go down in history as an effective negotiation strategy.
Now you’re ready to apply these house negotiation tactics to your own home sale
Each party in a negotiation comes to the table with their own set of priorities and concerns, and an aggressive “my way or the highway” approach is likely to isolate the other side and create gridlock. Maybe you’ll get lucky and sell the house 100% on your terms. But if you find yourself navigating some back-and-forth, good old-fashioned bargaining—pull out these house negotiation tactics from your pocket and do as Voss would do: find a way forward.