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Understanding the negotiation process
Vendors sometimes think that moving from their original asking
price means they are "losing money", while purchasers are afraid of
"going too high" in the heat of the moment. It's a wonder
properties ever get sold, when the price a purchaser is prepared to
pay is often so much less than a vendor is prepared to sell it for.
Whether you are buying or selling, it helps to remember that market
value for any property can never be scientifically established or
arbitrarily insisted on. A property's price depends on purchaser
demand at the time of selling; when there is little buyer interest
in a property, the price tends to be lower. If there are lots of
buyers competing for a property, the price tends to be higher.
Neither the vendor's "I won't take any less than.." or the
purchaser's "This is my final offer" actually determine the price.
The price only becomes a reality when two parties agree to it and
exchange contracts at law. The point or price that is neither too
little nor too much depending on where you are standing is arrived
at by small (usually!) adjustments until both parties evolve to a
position they find mutually satisfactory.
Many vendors and purchasers think they can deliver a price
ultimatum. If this is done before the market value is arrived at,
it will usually bring negotiations to an end. The New Shorter
Oxford Dictionary (1993) says: "It is not a negotiation when one
party says "this is what I want." It is easy to forget that market
forces dictate prices and vendors who say: "We need $x to buy what
we want" and purchasers who say: "This is my one and only offer,
take it or leave it" need to ask themselves whether they have based
their figures on analysis of past selling prices for similar
houses, and not on their own wishful thinking. Whether you are a
purchaser or a vendor, leaving a window open for negotiation
usually means you won't get the door closed on the sale.
Where the balance of power lies in negotiations depends on the
market. In a sellers' market, vendors can and do make ultimatums
and hold out for dream prices, while in a buyers' market it is the
buyers who have the upper hand in any negotiations.
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