How to succeed in the negotiation process
Ways to prevent the seller from accepting an offer from someone else
You are in the midst of negotiations to buy a Toronto condo or house when the listing agent tells you that they are no longer working with you and have accepted an offer from another buyer. How is this possible? What could you have done differently to produce a better result?
To answer these questions, let’s review the bargaining process. The seller is under no obligation to accept any of your offers, including counter-offer. An offer is only an offer, it is not a contract. Owners are free to look at, and accept, other offers. Why? Because a counter-offer is really a new offer.
Even though the buyer and seller might agree to some, or even most, of the terms of a purchase/sale offer, any change by either side effectively creates a counter-offer. In other words, all previous bets are off and the parties are back to square one in the negotiation process.
Why would a seller accept another offer? It could be that another buyer came in with a higher price, better terms, or fewer conditions. Or perhaps the seller got tired of going back and forth with offers and counter-offers and decided to bring the process to a halt. How might you do better? Here are some strategies.
Begin with the end in mind. In other words, know which issues are most important to you as well as what concessions you’re willing to make. Suppose you require a price limit, minimal closing costs, and a quick closing. If you got one of the three items would that be enough? Two of three? Must you get all three? If you got your price (the top priority) but not the other two items, would you go ahead with the purchase? The trick here is to determine what’s important, what’s a must and what isn’t.
Communicate your position. With your real estate agent negotiating on your behalf, explain what you’re willing to offer and how much is too much. The realtor can then look at current market conditions and suggest the best approach to take on the basis of price, terms and negotiating tactics.
Show your interest. Be honest with the seller about your interest in the property. This doesn’t mean revealing all of your bargaining strategies or suggesting a willingness to pay any price. Instead, show just enough interest, involvement and motivation to signal that you’re serious.
While counter-offers are designed to let the other party know that you’re still in the negotiating game, they represent some risk to both buyer and seller. A counter-offer is a new offer and a new offer may not interest an owner or a buyer. Sensing what to ask and when to back off are both part of the bargaining process.
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