Lessons Learned by Condo Sale

Lessons Learned by Condo Sale

Notes on Negotiation Written by Marty Latz, Latz Negotiation Institute

My mom recently closed on the sale of her condo, and I just debriefed on the negotiation with our real estate agent. Here is what we learned. We all can benefit from these.

1. Homework paid off with the right real estate agent.

I interviewed four real estate agents, put them through their paces, and then checked references. The time was extremely well spent. My mom would have gotten less and the condo might still be for sale but for our agent’s marketing, staging, negotiating, and closing skills.

Something similar occurred when my wife and I sold some property in northern Wisconsin. Our agent’s creativity and unvarnished advice there also proved invaluable.

Do your homework and select the right agent, assuming you’re hiring one. Don’t just take a friend’s recommendation. You won’t regret it.

2. Be aggressive but reasonable on the first offer/listing price.

After extensively researching the market and comparables, we listed the condo at an aggressive but still market-oriented price. We got a decent amount of traffic early on, but only two offers (one a lowball). That told us we were on the high side of reasonable.

Fortunately, you only need one.

3. Step into their shoes and understand their psychological expectations.

This is what we learned about the buyers, which was important.

• They were a couple in their 80s with a lot of equity in their house.

• They were downsizing and were cash buyers.

• They loved my mom’s condo.

• They felt the condo was very aggressively priced based on the most recent comparable.

• They initially wanted to offer substantially less than our list price based on that comparable, but their agent strongly recommended against this.

• They ultimately made a very attractive offer.

We countered on price and added an earlier close date (which would save my mom on her mortgage). They dug in their heels on the price but accepted our close date.

I was surprised they didn’t counter on the price. After all, they only made one offer. From their perspective, though, they felt they had already moved a lot from their initial evaluation to their offer.

Their agent told us this was their absolute ceiling/best and final offer and – based on what we learned of their agent’s reputation – we believed her. We accepted.

It’s crucial to understand the psychological expectations of your counterparts. I would not have recommended their “make just one offer and then dig in” strategy. But I understood it. And the latter drove our final move.

4. Leverage trumps standards.

Despite our agent’s ongoing efforts to generate more potential buyers and other offers, we didn’t have a good alternative/Plan B to their offer at that time. And the holiday season was starting (not a great time to sell). In other words, not strong leverage.

Yes, we could justify a higher sales price. But it just wasn’t worth the risk of waiting, and there was a financial and psychological cost to it.

In other words, leverage trumps standards.

Latz’s Lesson: In real estate sales negotiations, do your homework, set an aggressive first move, step into your counterpart’s shoes, and remember – leverage trumps standards.

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Marty Latz is the founder of Latz Negotiation Institute, a national negotiation training and consulting company, and ExpertNegotiator, a Web-based software company that helps managers and negotiators more effectively negotiate and implement best practices based on the experts' proven research.  He is also the author of Gain the Edge! Negotiating to Get What You Want (St. Martin’s Press 2004). He can be reached at 480-951-3222 or Latz@ExpertNegotiator.com

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