Negotiation in a Real Estate Deal or Transaction

By Darin Windham, Realtor
Keyfinders Group RE/Max Alliance

Have you ever asked yourself “how can I become a better negotiator?” If yes, you’re in luck, because the answer is simple: all you need to successfully negotiate on a higher level is to learn the psychology behind business negotiations.

Mary P. Rowe, a professor at MIT, defines negotiation as “all interactions between two or more points of view.” When you think about the psychology behind real estate negotiation, it really means learning how to navigate diverse perspectives and expectations. Fortunately, this complex topic can be broken up into more manageable parts. And the following real estate negotiation tactics are a good place to start.

Create Win-Win Scenarios

The most skillful negotiators are those who create win-win scenarios for both parties in the equation. Just because you are trying to score a deal, does not mean there’s nothing in it for the seller. For example, investors hoping to acquire an investment property for a low price may offer some concessions to the seller, like offering to cover moving costs. In the big picture, moving costs are a small expense for investors but could be a large gesture to the seller.


Even though you are trying to create a win-win situation, look for areas you are willing to budge on within the contract. Perhaps you might offer to clean out the property to knock a few thousand off the sale price. Or maybe, you want to pay a little more for a quick closing date. Think through potential areas for compromise before you sit down at the negotiation table.

Include An Escalation Clause

An escalation clause is typically used when one or more parties think a home will receive multiple offers. It states that the seller agrees to pay a certain amount more than the highest offer received. There will usually be language capping the total sale price, to ensure investors do not agree to more than they can afford. An escalation clause should be discussed when negotiating in competitive markets to help lock down the property for investors.

Negotiate In Person

No one could have predicted how the rise in technology would impact basic interactions; however, the power of email and texting have left a lot to interpret in daily conversation. This is why negotiations should always be held in person when applicable. A face-to-face conversation helps make sure everyone is on the same page.

Listen Before Reacting

Always check your ego at the door when entering negotiations and listen carefully before reacting to any statements. You might be confident and well-spoken in your negotiations, but that does not always go for everyone else. Give others a chance to respond fully before coming up with a counteroffer or moving on.

Focus On the Outcome

Never lose sight of your end goal when negotiating. It can be easy to get distracted by counter offers or tangents, but remember you are there for a property.

Similarly, don’t let a few concessions make you lose sight of why you are there. Let’s say the sellers don’t agree on the closing date you want, but you still get a great price on the property. While you may not have gotten everything you wanted, that deal can still count as a win. After all, you just secured a great deal, didn’t you?

Darin can be contacted at 256-652-9032 or

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