Psychology plays an important role in our daily interactions with others; this phenomenon is not an exception to real estate deals. An offer that is delivered with confidence and clarity is likely to get accepted more expeditiously. There is no set price for any commodity, rather the market value is just the price the buyer is willing to pay and the price the seller is willing to sell it for; then this signifies that behavior is a factor in the negotiating process.
The idea is to clearly estate ones position and to demonstrate ones means business; this eliminates concerns the other party might be “bluffing”, which always leads to uncertainty about where the negotiations really stand.
Being clear about ones position does not mean the buyer should try to get the property for a unfair price or that the seller should try to make an unfair profit from the sale; it simply means the buyer or seller position is well defined out front in terms of how much the seller is willing to sell it for or the buyer willing to pay for it; thus providing a healthier negotiating environment. Although many buyers and sellers employ these techniques to take advantage of the other party that should not be the case since the best deals are the ones where both parties benefit. Ethical values are truly important to a successful negotiation; this is a very small world after all and what goes around comes.
Waiting for the other party to make the first offer is always wise; it provides the other party a sense where the person stands in terms of pricing allowing you to establish a price which is aligned with the other party expectations. Remember the price of an asset is just the price the buyer and seller are willing to entertain. Many times we feel control the situation if we are the ones doing the most talking, this philosophy is rarely true specially when negotiating a real estate deal; more importantly is to listen to the other party and wait to talk, that way you will be better prepared to engage in negotiations and debate if needed.
Assertive not arrogance is the key to effective negotiations, many times the two are confused and great deals are lost. Arrogance is a short sited technique since it discourages the other party and raises distrust. Assertiveness on the other hand promotes trust and clear understanding among the two parties, thus allowing for a more effective negotiation.
There are other motivators that can be employed during the negotiating process of a real estate investment; one commonly used technique is for the buyer to hand out a check for a couple thousand dollars that the seller can cash if he accepts the offer. Cash or checks provide the seller with an instant payment he/she can use for anything right away. There are two reasons this technique usually yields positive result, firstly the seller might need the money at that time; secondly if the seller does not need the money, but the seller is a savvy investor she/he might be interest in the cash since she/he can put that money to earn interest while she/he waits for the rest of the money. This is based on the concept of the time value of money, which essentially estates that a dollar received today is worth more than a dollar received a year from now. The concept is based on the fact that one can put the money to earn interest for the entire year, and secondly a dollar received a year from today is worth less than a dollar today due to inflation.
The real benefit of using clear and assertive language when negotiating a real estate investment deal is the effectiveness in providing the other party a clear understanding where you stand, therefore if the other party decides to continue with the negotiations then there is a real interest on their part. This eliminates a lot of figuring out many times required when negotiating, therefore reducing the negotiation life cycle, which can be equated to reduction of real time and as we all know time is money.
In summary when negotiating a real estate investment deal be assertive and clear in your language and avoid bluffs and playing games, it will just back fire on you.