Woodlands Real Estate Tip: How much should you give in a negotiation? Two rules that will save you thousands!
Good question. Well, assuming your price is reasonable, in other words, within a few percent of true market value, then the following strategy should work in most cases.
Let's assume you're selling a home for $250 000.00. An offer comes in for $230 000.00. The buyer hopes you'll "split the difference" and come down to $240 000.00 and usually, that's what sellers do... they "split the difference" and move 50% of the gap towards the buyer. It's the "honorable" thing to do.. it's "playing fair" and all that but it's not required!!!
Rule 1. Don't "split the difference". Make sure each counter is less than 50% of the gap towards the buyer.
Okay, how about the buyer that's just increased their offer by $5000.00 but you're still $20 000 apart? Sticking to rule 1 would mean we don't move $10 000 toward the buyer as that is a 50% move. Well, how about a $7000 move? That's less than 50% of the $20k gap? Nope. Don't do that.
Rule 2. Make each seller concession less than the buyer's last move. So, in the example above, the buyer increased their offer by $5000, so, you should give a concession of less than $5000.
These two rules force the buyer, over a number of negotiating steps, to make bigger moves than the seller.
Obviously each transaction has it's own unique situations and nuances and different strategies fit different circumstances BUT, just being aware of the above two rules will, in general, stand you in good stead and should save you many thousands of dollars over your lifetime.
Don't force yourself to stick to them. Sometimes you can use it once in a transaction & save yourself a big move and then, from that move on you can make more "honorable" moves. Again, it's more "art" than "science".
Have you used any interesting negotiation techniques or strategies? Let's hear about them.