The Balance of Self Negotiation in Real Estate
Looking to buy or sell a home anytime soon? I think it's best to be prepared intelligently and psychologically. I often wonder how many Real Estate Agent's have studied psychology in relation to helping their clients stay on point with their goals vs becoming lost in the wild of nature...Human Nature...
WHAT IS YOUR GOAL?
DEFINE. There are key parts of the buying and selling process where the mind and ego can interfere with getting what we want. It is so important to prepare yourself by asking many questions and creating a well defined strategy earlier into the process vs later. This plan creates a logical map for your mind and emotions to follow, thus thwarting illogical responses from meddling with your goals.
When considering a purchase of a home, it is a good idea to know what price you can afford right out of the gates...and not just what your lender tells you...but what works within your budget. Knowing this will prevent disappointment or even the selling yourself short on a home price range that you didn't know you could afford. It is also a good idea to have your lender let you know the average payment change is for every $10,000. This helps offset some of the games our minds will play on us. An example is if $10,000 may roughly add $40/month to a payment, you may not be as concerned when negotiation begins and you are $10,000 off your number.
When considering selling a home, you need to do your homework. That includes putting your Real Estate Agent to work by finding comps and offering a detailed analysis that includes measures like days on market, sold vs list, and what is actively for sale in your market near you as well. This homework is just that...work...as it also includes work you have to do on your own, like making time to review the data and counsel your Real Estate Agent provides. It is also a good idea to estimate what your net proceeds will be at closing including commissions, closing costs, payoff your current mortgage balance, moving costs, etc...By knowing these things in advance, you can make an educated decision on the list price, and more importantly feel good about it.
EXECUTE. This is the stage where you need to practice self awareness and discipline. After you have your goals defined, know your limitations and boundaries, as you have to maintain the course within your defined strategy at each step. With a plan, if you start to become emotional and start to veer off the path of your goal, you can have something to review in the midst of execution.
When considering buying a home, you and your agent will be negotiating the best deal, and in this market you may become part of a bidding war on a property. Human nature may push you to be offended or even angry during this process. Imagine you absolutely love a home, and it receives an offer while you are in the process of determining your offer...some common responses include frustration leading to withdrawal or rejection...which may be against your goal. If you were to decide on an offer, execute it based on the rules and boundaries within your goals and plan...accepting the situation as it is...that is better action in working towards your goal. During the inspection, things may come up, and the psychology during bartering may have you feel once again you want to withdrawal. An example is If $3000 in repairs are needed, and the seller is not willing to fix a thing. By knowing the market, and knowing your options (i.e. it being a seller's market and you understanding the difference of a seller credit vs a purchase price adjustment)...you would determine that this is something that is reasonable when otherwise emotion prevents logical thinking. The logical space is where you are strongest in maintaining path of your goal.
When considering selling a home, and you are contemplating the list the price for your home, you ponder the variables that create fear that may include 'what if it takes a month, three months, or a day to sell my house'. A simple scenario to consider is if you list your home at $399,000 and you get an offer for $395,000 the first day on the market. If this fits within your goals (while looking at the financials and net proceeds analysis), you may want to logically be aggressive and accept the good offer (if the financing is strong and the conditions are reasonable). Human nature might have you barter for $5,000 more or nit-pick to the point you lose the offer. $5,000 financed may not a lot of money on a $400,000 home, if you are considering all factors. Imagine that happens with a fast offer, and you let it go...and another offer did not come in for a month, you just spent another house payment while worrying extensively for that entire month if you will find another buyer or have to lower your price. You should also consider you want your buyer happy going into inspection where you need to negotiate once again.
REVIEW. Review is related to self awareness. It is so important to review your goals and boundaries and strategy on every level and during every part of the process. This will keep you on point with your goal, and can help you be aware if your ego or mind fall into an emotional place fogging logic. Review is also about being aware of the other side...when you are thinking what you want, always consider the intentions and mindset of the other side. 'Do unto others' is also a very important consideration. By trying to understand the other side, you are able to adjust your strategy and respond with action within your boundaries to get to your goal.
I wrote this article after seeing the effects of 'bidding' on Ebay, or at auction, on human nature. So often we fall into the war, without being aware of the destruction we are doing under our own feet...aka foundation...aka your goals. We should always be strong and strategic in negotiations, and a good Real Estate Agent will help logically manage your goals, while providing relevant data to the other side to prove your points related to your decisions and goals. Strength is not only the ability to walk away or to tell the other side 'off'...it is being strong enough to plan, understand, and execute. As Benjamin Franklin said, "Failing to plan, is planning to fail"...the depth in that cliche related to this article, is how important it is to having a plan to overcome common human nature while getting what you want...your goal.