patrick.net

Thanks, DinOR!

I just saw this great post on Ben Jones's blog:

http://thehousingbubbleblog.com/?p=504#comments

scroll down to 2006-04-17 06:55:44

It's very long so I won't post the whole thing. It's a repost of a Housing Panic post by a guy who did RTC work around 1990.

Two words: psychological warfare.

This bloke won't haggle. I think we all need to haggle like an Arab at a bazaar. Me, I don't stop until the "seller" is in tears.

This one works for ALL kinds of offers. You've tracked your "escalation of commitment" and are now ready to present a "quality" offer. Make sure you use the word quality. It's important. Start by saying this;

Mr. Seller, I just want to start by saying that whatever happens in the next few minutes Mrs. DinOR and I REALLY are a nice young couple! (This usually gets a slight chuckle and relieves a little tension). It also puts the seller on notice; This is not your "dream" offer! So get those notions of making a killing ALL on this one deal out of your head.

Mr. Seller, my wife and I have watched with keen interest as this property has developed and we like it. What we want to put in front of you is a QUALITY offer. (Pause here for effect as if you are choosing your words very carefully here!) Originally on the market for X dollars and that didn't happen, right? (Get them to say right or at least wait until they nod in agreement before moving on). Well, I don't expect people to do business with me, lose money at it and then actually want to do it again, right? At the same time I don't expect people to make ALL of their money off of me, O.K? (This usually gets a mild chuckle too and by now they know that you have done this before and just want to get to "the number") After much we consideration we are prepared to offer you X dollars AND we don't even need to take occupancy until X date! (Or whatever "give" you want to insert here). This works, believe me.

Don't be mean to the seller. A lot of people will prefer bankruptcy over selling to a mean buyer.

DinOR,

Interesting tactical point: should a buyer demand an actual, face-to-face negotiation with the seller? The "normal" negotiation is a completely disintermediated affair, done entirely through agents who often never even meet each other face-to-face.

I worry that many sellers will be very hesitant to agree to meet face-to-face. People use agents so that they don't have to go through the "unpleasantness" of the negotiation. They have come to believe (right or wrong) that they aren't strong enough to represent their own interests and so must delegate to a "professional".

Also get to know the pros and cons of selling for the other side. Talk up the pros of taking your offer, talk down the cons of not taking your offer.

Randy H,

All good points. The last time I made an offer an a piece of real estate I told the sellers realtor that I would like to present my "quality" offer in person. They did not object. I understand that is by no means the standard but I asked and I got it. It's just too easy for the seller to pull down the fax with "the number" and reject it out of hand. Now true, my offer was rejected as well. But God did it feel good! I still accomplished so many things! Since that "casual" conversation a year ago they have made SO many improvements. Things that should have been handled before these condos were even put on the market. They are in the process of completely re-doing the waterfront with a retainer wall (custom laid rock wall) back filling with topsoil and planting grass, tons of landscaping. Installed an on-site mailbox and they're sealing the concrete in the court yard among many other improvements. Most sheeple would have just stood in line, paid and not gotten the benefit of ANY improvements. Let's all try to remember, you can't own everything so don't even try. But the things you do want to own, make your best offer and even if it's refused people still have to respect you. As SFWoman says though, do your research. When they rebutt your offer you'll have more ammunition to reply with!

Negotiation starts with preparation (know everything you can about the neighborhood you want). You’ll need to know a bargain when you do find one. Then you need to make lowball offers without just wasting your time. Remember when you applied to college or grad school? You submit lots of applications. But you don’t waste your application fees or energy on schools that will never, ever take you. So your offers must be low enough to entice a counter but should never get accepted outright.