Real estate negotiations – Jerusalem Post Column October 2016
Last week I bought a new oven. Even though the store came highly recommended, I noticed the salesperson was trying to upsell the oven I was buying. And yet, I ended up paying the exact price I had intended to, and not a Shekel more, by following the same principals I use when buying real estate.
In the following paragraphs I will endeavor to provide you with the most basic rules of real estate negotiations. Sticking to these guidelines will most likely save you tens of thousands of Shekels when buying your next apartment.
Separate the people and the subject
Though the oven salesperson told a couple of blunt lies, I refrained from calling him a liar (tempting as it was); instead, I demonstrated patiently how the “facts” he had mentioned are simply not true.
In real estate this is all the more important. After all, very often you will be buying someone’s house; the place where they grew up or even raised their kids. Emotions tend to run high and things are taken more personally. Do your best not to antagonize your counterparts to the transaction or be offended by them. Remember the golden rule – “soft on the people, hard on the subject”.
Digging your heels in
Don’t do it and don’t force the other side to do so either. Insisting on something you can’t get will not help your cause. There really isn’t much that can be done after setting an ultimatum on something unattainable. This scenario can only end in one of two ways: the negotiations ending, or you being forced to ‘fold’, leaving you in a very weak negotiating position. As every parent knows, if you threaten your child with punishment you had best be prepared to make good on your word. Similarly, being stubborn about minor details without looking at the big picture will most likely end up sabotaging the transaction. Try to replace a “take it or leave it” mentality with flexibility and creativity.
Before coming to the store I checked out oven prices and models, decided on a budget and knew which features were important to me and which I was willing to compromise on. This way I was already prepared to deal with counteroffers.
A real estate negotiation should never start before having a very clear budget, a comprehensive knowledge of your true alternatives, and a firm understanding of what your red lines are. Of course, this is much easier when buying an oven, and yet, much more crucial the higher the stakes get. If you don’t feel confident in your pre-negotiation preparation, I highly recommend consulting with a professional.
Practice and practice again
This is really important. So important, in fact, that I never pass on an opportunity to do so, even when buying an oven. When my clients approach the negotiation stage of buying a property, I encourage them to participate in negotiation simulations. They alternate acting as the buyer, the seller and a bystander, so as to gain different perspectives and help foresee possible conflicts and solutions. This calms down the negotiators and prepares them properly.
Finally – no favors
Don’t forget – the other party is just as interested in this deal as you are – don’t be overcautious or intimidated. Don’t be pressured into making a fast decision before you feel comfortable with it, and never feel obligated to make any transaction whatsoever if you feel it isn’t the best one for you.
Following these rules saved me roughly NIS 400 last week and made for a much less irritating buying experience. Following these same rules when buying real estate can be 100 times more profitable and all the more rewarding. Good luck!