Watch TV for an evening, or read the retail advertisements in your daily paper and you'll see that most of the presentation is designed to elicit an emotional rather than a rational response. The tools of the trade from the standpoint of the vendor is to create a sense of urgency in the other party. See how many of the following ploys you recognize. (1) A certain product will no longer be available once the inventory has been sold. (2) The sale ends tomorrow. (3) For the next 3 days, a car dealer will sell below costs in order to become number one in sales regardless of profits. (4) The new models will be 10% more expensive. (5) I can get zero FHA points if we can lock in a deal today. (6) There's another buyer who is going to make an offer tonight.
It's easy to picture a good negotiator as a professional who would never allow emotions to intrude into a bargaining session; but that's because we only think of negotiation in the context of a commercial transaction. Negotiation is pervasive in all aspects of human existence. Some of the best negotiators in the world are under 4 feet tall. They're children. Kids are routinely able to extract concessions from bigger and more powerful adults with very little effort by playing on their emotions. We let them get away with this because they're so vulnerable. We bend over backward not to take advantage of them. Even tiny tots learn to exploit this trait to manipulate adults around them. Early on they also learn to interpret body language and facial expressions; then find ways to use adults' emotions to get their own way time and time again.
Because of so many car dealers and retailers offering discount and rebate coupons as part of their marketing strategies, people have become accustomed to playing pricing games when they sell. The reasoning goes that the buyer is going to offer less than the asking price, so the price should be increased to allow a discount to be offered. Oddly enough, this works just enough times to encourage people to do it. Because of this, buying at a bargain price could well require the buyer to not only discount the inflated price, but to get a discount from fair market value as well. Not an easy task. The secret is to get the other party into a frame of mind where he wants to deal with you, and can excuse himself for accepting less, or paying more, than he had expected to do.
Only a relatively few salespeople have the ability or inclination to negotiate either buying or selling transactions. What passes for "negotiation" boils down to a series counter-offers ferried back and forth between buyers and sellers by eager salespeople. These invariably focus upon price, and rarely mention financing terms. When an impasse is reached, as often as not, no deal is concluded. The salespeople wind up with little to show for their time and effort. In a cash market, creative financing has become a lost art that few salespeople even remember.
Although buyers are most concerned with down payment and monthly payment when they buy, almost every seller is more acutely tuned to the price offered for a house when the transactions boils down to the buyer getting a new loan and paying cash. Both of them should be more concerned with the loan terms.
Institutional lenders are among Americas most regulated industries. They must conduct their operations under the continuous scrutiny of a number of federal and State agencies, as well as consumer advocacy groups and in accordance with a host of regulations and laws. In short, while they may seem to be in command when a person is trying to get a loan, they are most definitely under the gun when that same person stops paying.
I made my living for five years as a licensed real estate salesman and Broker primarily selling houses. When your sole source of living expenses is commission income, you swiftly discover that your time really is money, and you dare not waste any of it. The key to avoiding wasting time with buyers in this tough market is to qualify them rigorously in terms of the capacity to qualify for and make payments on available loan packages; and to discover what their true needs are versus their "wants".
Sometimes we leave money on the table because we’re focused solely on one aspect of a transaction rather than looking at all the possibilities. An easy example of this is when we have a chance to bid at a foreclosure sale on a property that seems unfit for human habitation, and we don’t bid, letting it go back to the lender. In so doing we let the undesirability of the property distract us from considering the desirability of the land it is situated on which sometimes can be worth many times the value of the improvements.