Real estate negotiations – not a zero sum game


Section about real estate in Israel

Jerusalem Post real estate supplement cover

People negotiate every day whether they realize it or not. You negotiate when you discuss with your wife who will wash the dishes and who will throw out the trash, you negotiate with your friends on where and when to meet, you negotiate with your co-workers on the best way to carry out a certain assignment and every parent negotiates with their children on a daily basis.

Real estate negotiations are not fundamentally different than these negotiations, they’re just incredibly harder .OK, I admit I’ve never had to deal with a screaming toddler in the middle of the supermarket, and still, most people are more apprehensive about negotiating a real estate transaction.

One of the biggest difficulties stems from the fact that the most prominent aspect of real estate negotiations is monetary. This leads people to believe that the whole negotiation process is a zero sum game (one’s gain is the other’s loss). The truth is that many times there are opportunities for a win-win situation that would lead to a much higher chance of completing a deal which would benefit both parties.

A client of mine bought an investment property in Arad. At first, the landlady asked for an unreasonable price and wasn’t willing to budge. After some questioning she revealed that she intended for this money to pay her rent until her new apartment was built, and to cover the double moving costs. In addition, the prospect of moving twice also reduced her desire to sell.

The solution to this case was quite simple – allow the seller to stay as a tenant for reduced rent until her new house is completed. In order to protect my client, we added a clause that after 4 months the rent would climb to market price.

This is just an example of how a win-win situation can be found, and even generated. The best way to generate similar situations is by creating an atmosphere of “working together to solve the challenge”, where the challenge is usually the price gap. I suggest using questions such as: “what do you think could make this work?”; “is there a way to make both of us happy?” or even: “do think this idea could help us overcome our differences?”

The three most common additional factors which can create a win-win situation are payment schedule, moving date and repairs in the apartment. Of course each deal has its own characteristics, and I urge you to try and find them or consult a professional.

Many times it will be in your best interest to make some minor concessions rather than have the whole deal fall through. Remember, even in a chess game, both players lose when the cat flips the table over.