Common Negotiating Blunders

Here is a list of seven commonly made real estate negotiating blunders (real estate negotiating tips) that can help you stay out of trouble. If you're buying property without an agent and your learning these factors for the first time, you may want to consult a professional who can check your work. My comments in italics. From USNEWS and World Report ONLINE

1. Not understanding the seller. In a home price negotiating, it's essential to look at the deal from the opposite side of the table. "You want to make best use of the seller's fears," says Ed Brodow, a negotiation expert and the author of "Negotiation Boot Camp." "So the question is: What are the pressures on the seller of this house?" Sellers today could be facing any number of anxieties. Perhaps the local housing market is even weaker than the sluggish national one. Maybe the seller has landed a job in another city and has already bought a home there. He or she could even be facing bankruptcy. Any information you can obtain about the local real-estate market or the seller will strengthen your negotiating position. WhenSteven Cohen, president of the Negotiation Skills Co., first visited a home that was for sale in 1981, he noticed that the property had no furniture or heat. "That gave us a little bit of a sense of the degree to which the people wanted out and gave us a heck of a lot more bargaining power," Cohen says. "We offered tons less than what they were asking."

Very good advice. I'd specifically recommend researching what the seller owes at the county recorder. Many of my clients are shocked when, during listing appointments, I mention the amount they owe on their home. ANYONE can find this information, and if you don't, you could wind up throwing money away!

2. Forgetting your homework. Some of this needed information is readily available. You can get the sale prices of comparable homes and discover how long certain listings have been on the market from a real-estate professional, the Multiple Listing Service or an online resource, says Joshua Dorkin, the founder and chief executive officer of real-estate networking and information site BiggerPockets.com. To take the temperature of a local market, identify a couple of good real-estate blogs and click through them daily. To find out the seller's motivations, try getting in touch with him or her directly. Some will refer you to an agent, but others will chat candidly. In addition, "researching who lives in and around the home you're [considering] buying is of the utmost importance," Dorkin says. By speaking with neighbors, you'll gain a sense of what life is like in the community and perhaps even pick up some insight into why the sellers are moving. "You can never have enough information," says Jim Camp, the author of "No: The Only Negotiating System You Need for Work and Home."

VERY GOOD information, about reading blogs I mean! But seriously, factors like how long a home has been on the market are not "nice to knows", they are the starting point of any deal. If you are going it alone and you are just learning about factors like these, you need to find a professional who can advise you, or you'll be waisting your money.

3. Showing your cards. While looking for information on the seller, it's important to divulge as little about yourself as possible. Any knowledge you provide could be used by the seller as leverage. "For example, you may want to pay cash for the house, but the sellers don't have to know that," Camp says. If you are capable of paying cash, the sellers may hold firm to their asking price, he adds, "because it means that you are a person of means."

The first rule of a successful deal, you really don't want it that bad. The second rule of a successful deal, you really don't want it that bad....Shall I continue?

4. Not having options. When you begin negotiating on a specific property, make sure you have identified several other homes you'd be happy with as well. "Never negotiate without options," Brodow says. "If you find a perfect house, find another house so you are not so desperate to buy [the first] house that you wind up giving in to whatever the seller wants." Furthermore, it's to your advantage to tactfully — either directly or through your agent — let the sellers know that theirs is not the only property you are considering.

The biggest lesson I've learned in real estate is to NEVER fall in love with a property, always have several options at any given time. When you decide your going to buy home "X", and only home "X", you get tunnel vision, and you start rationalizing away the danger signs. In one of my first attempts to buy investment property, I overlooked many such warning signs and it cost me several thousand dollars I did not need to spend. Let me explain, after coming to terms on price for the property I scheduled an inspection, notified the seller as to time and date by phone and in writing. On the morning of the inspection, we, (me, the appraiser and an electrician) waited at the property for 45 minutes for the seller to arrive with keys. That should have been it, I should have walked, alarm bells were clanging in my head. But I wanted that property.

This deal made me way smarter about real estate and listening to my "little voice." Learn from my STUPIDITY!

5. Skipping the face time. Instead of handling the negotiation process by phone and fax, it's important to meet the seller in person. "The most effective way to influence or persuade — which is what negotiation is all about — is to do it face to face," says Tom Hayman, the president of Negotiation Expertise, which trains people in negotiation techniques. "Because then you get your words, you get your voice and you get body language — or nonverbals — all into the equation." If the transaction is being handled by real-estate agents, the sellers should request that their agent get together with the buyer's agent in person to discuss the prices. If your agent is unwilling to do so, he might not be the right agent for you. "A buyer should be looking for an agent who is going to do that kind of effort for them, because it always pays off better when it's face to face," Hayman says. (Buyers using agents should be aware that their agent gets a bigger commission on a higher sale price and therefore may have less of an incentive to push for a lower price tag.)

One investor I know often insists on presenting his offers directly to the seller, not through the sellers agent. It's your right in Utah.

6. Offering a specific number. When extending an initial offer, present a range of figures — say, from $420,000 to $450,000 — rather than a hard number. An offer of a specific number that is considered too low could upset the seller enough to derail the negotiations altogether, Cohen says. A price range, however, affords you more flexibility. "In negotiating, you don't want to adopt a position where you paint yourself into a corner," Cohen says. "Because the only way you can get out of the corner is to lose face and perhaps lose a few bucks."

I've never heard of this, it may work, but I wouldn't do it. Before I make an offer, I know what the right price is, and have other options if the seller does not agree. If you want just one home this badly, you're probably too in love with the property and are violating a cardinal rule of real estate.

7. Getting caught up in the game. Remember, your goal is to purchase a home — not beat the seller. "People often get so enmeshed in the negotiation game that they lose the house they like and could afford because they didn't get the negotiation price they thought they could get," says Daniel Shapiro, associate director of the Harvard Negotiation Project and coauthor of "Beyond Reason: Using Emotions as You Negotiate." So what if the seller doesn't bring the price down as much as you had hoped? If you really like the house, the price has been reduced enough to fit your budget, and you've given the negotiation process your best shot, consider declaring victory. "I hear a lot of situations where real-estate deals fail because one side or the other refuses to come down another $5,000," Brodow says. "They don't want to give in, and then it becomes an ego thing."And here is the rest of it."

Negotiating is not a game. There are a lot of misconceptions about negotiating, as if there is some "magic" about getting a great deal. Again, not locking yourself into one property, knowing all you can about the properties your bidding on, and understanding value in the area your looking are the ways successful investors find deals. (real estate negotiating tactics