Effective negotiation is solving problems jointly, not haggling

SMART MOVES

January 06, 1991|By ELLEN JAMES MARTIN

The young, single mother became excited recently after touring a four-bedroom, brick town house in a distant suburb.

Although in poor shape -- with carpeting and appliances torn out -- the place seems perfect for the woman and her two small boys. Stunning floor-to-ceiling windows make the living and dining rooms unusually bright. The house is well-situated as an end unit. And the fourth bedroom would be an ideal playroom for the kids, she reckons.

The only catch is price.

Comparable homes in the neighborhood are priced 5 percent to 10 percent lower. The woman would willingly take a town house requiring extensive renovation. But she insists that it's only fair she get a sizable discount to reflect the property's condition.

The single mother could greatly enhance her chances of getting a good price if she and her agent heed basic tenets in the art of negotiation, according to experts in the field. At the root of effective negotiation is the recognition that more than money and inanimate objects are involved. People's emotions are, too.

"Good negotiation is joint problem-solving rather than bargaining and haggling," says Roger Fisher, director of the Harvard University Negotiation Project and co-author of "Getting to Yes," a best-selling book describing "principled negotiation," a technique to reach mutual agreement without the traditional contest of wills.

Staying objective is especially important when it comes to real estate transactions, the experts say. That's because people identify closely with their homes. For a seller, the property is a reflection of his or her taste, lifestyle and social status. Given this close identification, the buyer could actually do better on price if he compliments the seller, experts say. Surely the buyer should avoid insulting the seller.

"I like your house and I'll pay a fair price for it if I can afford to," Mr. Fisher recommends as the approach the single mother should take in negotiating with the seller.

As a starter, Mr. Fisher recommends that the woman (along with her agent) compile as much relevant information as possible before preparing a formal offer. Objective data is the ammunition the woman needs to get the seller to drop his price -- not subjective comments such as "Your place is really a mess."

Here are the questions Mr. Fisher says the single mother should answer before entering the formal negotiation process:

* What are objective standards of fairness as to how the town house should be priced?

The single mother should seek out all the data that bolsters her case on price. She should be able to obtain through her agent, without charge, data on homes that have sold in her neighborhood recently. From government records, she can find out how the town house was assessed for tax purposes. In addition, she may be willing to pay for a formal appraisal of the property if she thinks that will support her case for a lower price.

* How much would it cost to renovate the town house?

The single mother, for instance, could gather data on the price of new carpeting and appliances to support objectively her argument that the price should be moderate. Such numbers -- typed and presented to the seller -- should be more convincing than general statements about the home's condition.

* What are her own interests in the deal?

The single mother should enter the negotiations with a clear mental or written statement of what she will and won't accept. How high is she willing to go on price? Would she let

the seller do the home repairs at his or her own cost or would she insist on doing them herself? When does she want to move in?

* What are the interests of the seller?

Is the seller anxious for a quick closing or would he rather delay settlement for tax or personal reasons? Does the seller want the certainty of a cash offer or will he or she accept contingencies in a contract? Does the seller need a place to store furniture until his or her new home is completed?

* What are some ingenious ways the single mother could meet the seller's interests without compromising her own?

Would she be willing, for instance, to store the seller's furniture in her basement for a few months? Would she make a cash offer? Would she hasten or delay settlement to suit the seller's preferences?

* What is the buyer's best "walkaway alternative?"

The single mother should list her realistic alternatives to the purchase of the town house. Does she need to move immediately or could she continue to rent? Is there another property she likes nearly as well that she would buy if she didn't go for the brick town house?

* What is the seller's best "walkaway alternative?"

Does the seller have to sell immediately because foreclosure looms? Does he have another offer for the house pending that is rTC higher than what the single mother is willing to pay?

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