Whether you’re buying, selling, or renting, negotiating is a big part of real estate. It’s also something that comes up in other aspects of your life, like when asking for a raise at work or buying a car. So it’s a good financial strategy to know the basics. Even if you’re using an agent who does most of the face-to-face negotiating for you, it’s worth learning these three basic keys to negotiation:
1. You Don’t Get What You Don’t Ask For
To a lot of people, it's the first rule of negotiation: Ask for what you want. The other side can’t read your mind, so if you want a raise (or even something as simple as a discount on a purse), bring it up! In a real estate setting, this could mean asking for a shorter or longer lease, for a quick or slow closing, or even something trivial like for a room to be repainted.
2. Stay Cool
“Good cop/bad cop” works on TV, but in most real-life negotiations, a positive, pleasant attitude is the way to go. Negotiation scholars have proven that the saying “you can catch more flies with honey than with vinegar” is actually true. Sometimes it’s helpful to just give your summary of what the other side just said, to show that you’re listening: "Let me make sure I’ve got this right. You’re offering me a $5,000 closing credit and you’ll fix the garage?"
Because of the way we’re trained, women often get anxious during negotiations (If they liked me, wouldn’t they just offer me a raise? Why do I have to ask for it?). If this is you, the way to stay cool is to slow things down. It’s okay to say, “That’s a really interesting offer, let me think about it and get back to you” or simply use the good old, “Let me sleep on it; let’s talk tomorrow.”
3. Know The Alternative Courses Of Action
One of the key concepts of negotiation is to know “Plan B.” Let’s say you want to buy a house and there are two basically identical houses that you like. You know you can get the Elm Street House for $380,000, but you also like a Main Street House that’s priced at $400,000. Think for a minute—what should you offer to pay for the Main Street House?
The answer is anything up to $380,000, otherwise your “Plan B” is better. This was an easy exercise, but the core concept, known as “BATNA” (the best alternative to a negotiated agreement), applies in every negotiation.
Let’s take a slightly more complex situation—one where you want a $5,000 raise. Well, you know to ask, and to ask politely, but how hard should you push? That depends on your BATNA, your Plan B. If leaving the company and going to a rival would get you $10,000, then that’s your BATNA, and you know it’s okay to push really, really hard. If leaving the company and going to a rival would only get you $3,000, you might still want to ask for $5,000, but you know better than to go in with guns blazing.
Tell us in the comments: What's your approach to negotiation? How does it work for you?
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