Tips and Traps When Negotiating Real Estate: Offer and Counteroffer

Offer and Counteroffer

In the vast majority of real estate transactions, the buyers and sellers don’t negotiate with each other. Rather, each has an agent, and the negotiations are carried on through those agents. In this chapter we’ll see how to negotiate through offer and counteroffer when the agent is the intermediary.

Negotiating through an agent has pros and cons. On the plus side, you can vent your feelings to the agent about the house and seller and not worry about offending the seller. You can openly com­ plain that the seller is a miserable housekeeper and you wouldn’t keep a dog in a place in that condition. The agent will never men­tion it to the seller.

On the minus side, all the information that you get about the other party comes from the agent. If your broker isn’t perceptive or forth­ right, you could get a skewed perspective about the seller that could lead you to accept an offer for too little or to counter for too much.

TRAP

Be sure you keep in mind whom your agent is working for. Technically, a seller’s agent can’t reveal to the buyer any information that would harm the seller. For example, a seller’s agent can’t reveal that the seller has said, “I’d be willing to sell for $10,000 less than I’m asking,” unless the seller authorizes the agent to say this.

Similarly, a buyer’s agent can’t reveal to the seller the buyer’s top price for the property unless authorized. Further, if you’re a buyer working with a seller’s agent and you tell that agent that although you’re making an offer for one price, you’d actually be willing to pay $10,000 more, the agent is ethically bound to reveal that information to the seller! The same holds true in reverse for a buyer’s agent.

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Therefore, as a buyer, you frequently need to use your best negotiating tactics both on the seller and the agent. This means that you will want to hold your cards fairly close to your vest.

Yes, ask the agent for opinions both on the true value of the prop­erty and on the amount to offer. Yes, consider carefully what the agent says and then ask the agent what he or she would do in your situation. But always take a moment to come away and weigh what has been said against the scale of competence, the fiduciary respon­sibilities of the agent (briefly described in the Trap above), and com­ mon sense. Ultimately, you need to make your own decision.

TIP

In a real estate transaction, the only person you can count on to be 100 percent on your side is you.