Tips and Traps When Negotiating Real Estate: Always Strive for the Moral High Ground

Play the Players: Always Strive for the Moral High Ground

This may seem to be a peculiar rule since, after all, you’re presum­ably not trying to do anything dishonest or illegal. However, there are more ways to kill a deal than being dishonest or illegal. If you portray yourself as tricky, underhanded, or sneaky you are sure to undermine the other side’s confidence in you, and once that’s eroded, successful negotiating will become increasingly difficult.

For example, I once had a buyer (I represented the seller) who presented an earnest money check for $2,500. I noticed that he had written out “fifteen hundred” while using the numbers, “2,500.” For all practical purposes the check was uncashable and useless. Of course, it could simply have been an accident in writing out the check, which is what he claimed, and he eventually wrote out a new and correct draft. However, my seller was put on guard and there­ after saw the buyer as sneaky and untrustworthy. Negotiations became awkward because, from that point on, the seller trusted nothing the buyer said or did. Eventually, the sale fell through, I believe simply because the buyer tried to pull a fast one on the deposit check.

In another instance, the seller described the property as being in perfect condition with no faults or problems. But an inspection revealed a drainage problem that caused the basement area to flood each winter. There was no way the seller could not have known about this, and from that time forth, the buyer was suspicious about everything in the house, demanded a second inspection, and chal­lenged all sorts of things from the roof not leaking to there being proper wiring. Eventually the deal was made, but only after extended negotiations, written inspection reports, and concessions on the part of the seller with regard to price and financing. All of this could have been avoided if the seller had simply come clean right at the beginning.

TIP

Successful negotiations are built on trust. Anything you do to limit or destroy that trust will harm those negotiations.

This has some subtler ramifications as well. Let’s say that there is some matter over which you refuse to compromise. Maybe the buyer wants you to rebuild a wall at the back of the property that is cur­rently leaning over and looking as if it might fall. You don’t want to rebuild, and you simply say, “No.”

Now the buyer begins thinking to herself, “Why doesn’t he want to do that? Is it just the money? Or is there something about that wall that he’s not revealing? Maybe the ground out there is bad. Maybe there’s a problem with the neighbor. Maybe . . . ”

An arbitrary refusal to yield on your part can be interpreted as an ethical problem—you have something to hide. On the other hand, if you refuse to yield, but provide an explanation that is reasonable, . your motives are no longer suspect. For example, you explain you had that wall fixed just two years ago. You paid a lot of money and the workers simply did a bad job. As a matter of principle, you sim­ ply will not pay for it again.

“Okay,” the buyer may think. ‘You’re not too smart when it comes to hiring a wall contractor. You’re stubborn about taking a loss. I can live with that, so long as you’re not trying to cheat me!” Your expla­nation makes it rational and understandable. You’re still operating on a high moral plane.

TIP

Never do anything that will make you look like a sneaky person. Always portray yourself as taking the moral high ground. You are making a legitimate offer with a legitimate deposit check. You are willing to make any legitimate compromise. It makes you look reasonable and trustworthy. It gives your opponents the hope that you’re someone with whom they can, and will want to, deal.

TRAP

It’s almost impossible to make a deal with someone who is, or at least appears to be, untrustworthy. If the other side is so distrustful that the only way they’ll deal is through their lawyer, you can probably kiss the sale goodbye. Most deals are actually made on a handshake (trust) with the paperwork to follow.

The Bottom Line

The rules for working with people are:

  • Never offend the buyer/seller.
  • Beware of choosing “nice” people to represent you.
  • Only deal with a person who has the power to decide.
  • Go directly to the buyer/seller.
  • Never believe anyone else is entirely on your side.
  • Always strive for the moral high ground.