Planting the Seeds of a Property Negotiation

Negotiation Phase 2:  Home Viewing

The home viewing is when you plant the seeds for a successful property negotiation.  If you do so, you will be in a better position to the get the right home at the right price.

Rule No. 1:  You’re always negotiating. 

In real estate, you and your agent are always involved in a negotiation with the other side, especially during the home viewing.  Whether you are speaking on the phone, corresponding by text or email, or meeting face-to-face, each side is sizing up the other, looking for clues as to how much the buyer is willing to pay and what the seller is willing to accept. 

If you’re the buyer, the home viewing is where your agent gathers information about the seller, confirms the Negotiation Gap, and begins to build the case for what will be the offer price.  It is important to point out that the game of negotiation takes place during the home viewing and agent negotiations (i.e., phase 3), not at the point of the offer.  By the time the offer is formally made, both sides have already agreed on the price.

If your recall from ldentifying the Negotiation Gap, it is important to re-engineer the Listing Price for two reason. First, it allows you to determine if the Listing Price is valid, close to being valid, or ridiculous.  Second, it allows you to determine how far off your offer price will be.   

In phase 1, we did our best to re-engineer the Listing Price but we should use the Home Viewing to confirm our assumptions about renovations and external areas.  Your agent does this by observing the condition of the home and asking the seller agent questions.

Rule No. 2:  Questions are your best friend. 

When your agent asks a question of the other side, this is not a sign of weakness.  Questions are your agent’s best friend.  Therefore, questions are your best friend.

Questions do two things.  First, they gather information that will help your agent understand the other side’s position and wiggle room to make concessions.  Second, they convey your side’s position in a constructive and palatable way.

In a negotiation, your agent is trying to convince the other agent that your facts and viewpoint are more valid.  The other agent is trying to do the same but in the reverse.  The best way to do this is for your agent to ask questions. (Note: your agent might not get an answer to all these questions but non-answers tell you something also and there is no harm in trying.)

My favourite buyer agent questions:

1. Is the price negotiable?  (First question my agent always asks.)
2. Why is your client selling?
3. When would the seller like to close and move out?
4. Has the seller done any renovations to the home?  When and how much?
5. What has the seller enjoyed about the home?
6. What are the neighbours like?
7. Has there been much interest in the home?  Any offers?  If yes, why was it not accepted?
8. How did you arrive at the listing price?  What comparables did you use?
9. Does the seller have a mortgage? How much?
10. What do you think about the market?

My favourite seller agent questions:

1. Why is your client looking to buy here?
2. What other homes have you seen?
3. What does your client like about this home?
4. What’s your client’s budget?
5. When would they like to move in?
6. Where are they moving from?
7. How will your client finance the purchase?

These types of questions gather information and identify differences in opinion.  For example, if the buyer agent disagrees with the rationale behind the listing price, he or she can follow up that question with a discussion about other ways to look at the value of the home.

Rule No. 3:  Your agent’s relationship with the other agent is the key to a successful deal. 

The decision-maker should never be the negotiator because ultimately the details of a deal need to be worked out offline.  In real estate, it is very difficult, if not impossible, to develop a channel of communication between the seller and buyer or landlord and renter in which one side does not have an advantage over the side.

This is not true with real estate agents.  The agents are equal and the only advantage they have over each other is their negotiation skills.  The ideal situation is that both agents are good negotiators and can work together to find solutions that will lead to a win-win for the decision-makers. 

In other words, the home viewing is a great opportunity for your agent to build a rapport with the other agent, gather information, look for differences in view, and begin laying the foundation for offline agent discussions, which is the next phase of the negotiation process.  In Stay Off the Field of Negotiations, I describe the back-and-forth that takes place during this phase and allows the negotiation to arrive at the right home at the right price.