As climbing interest rates continue to apply pressure on buyers’ purchasing capacity, serious sellers are recognizing that their window of opportunity to sell at an optimal price is closing quickly. As a result, home prices are gradually stabilizing and the average time to sell is increasing.
Will sellers and buyers be once again placed in opportunities to negotiate? Likely.
Here’s a technique that will help tilt the table in your favor.
BE SPECIFIC.
The asking price is $399,000 to make the house seem less expensive (since we read left to right and place a greater emphasis on the 1st number).
Since we understand the negotiation power of anchor setting, we offer $350,000.
Not our best play.
According to a 2015 HBS paper that studied experienced real estate brokers and data, negotiators who make precise bids, instead of using round numbers, achieve better outcomes.
For example, a list price of $1,020,000 is more informative and likely to lead to a smaller price adjustment than a list price of $1,000,000.
The same is true for other industries such as mergers and acquisitions (Musk’s twitter purchase at $54.20/share) or salary negotiation (ie; let’s consider $81,600 per year instead of $80,000 — causing the other person to feel you’re highly knowledgeable about the job market and the value of the position).
This tactic makes the other party assume there’s less room to negotiate.
Instead of offering $350,000 for your house, we could have offered $352,300; that number implies we performed a thorough analysis. Perhaps we evaluated a handful of comparables, maybe we used an appraisal method like replacement cost or income capitalization. Either way, we’re justifying the property’s value with tangibles.
Just don’t get too precise. Most people aren’t receptive to overly precise bids. An offer of $362,410.23 would seem suspicious, rather than being driven by facts.
Use specific numbers to imply you’ve done your homework.
Understanding the value, to you and to the other party, is the most powerful negotiating strategy of all.
You’re curious to know more about the direction of the market? DM or 514.245.1490
