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When it comes to buying or selling a home, the idea of having to negotiate can be intimidating. Most of us aren’t aware we have negotiating skills even though we skillfully negotiate daily. (Who walks the dog, takes the children to school, goes out to pick up lunch, prepares the report, etc., etc.?) Let’s debunk some myths about negotiating, shall we?

This Is Not Negotiable

Sellers often say to themselves, “This is the deal I’m willing to make. It’s not negotiable.” That’s not necessarily because there is no room to negotiate. It is the simple result of anxiety about negotiating.

Take this approach and you may be chasing away otherwise good potential buyers. The buyer gets into a huff about the seller’s inflexibility and everything goes down hill from there. This need not happen. Sellers should be willing to enter into reasonable negotiations and just remember that they can say “no” at any point along the way toward working out a deal. However, they need to ask themselves when each subject comes up, “Am I willing to lose this deal over this point?”

The buyer needs to have a similar mindset. When seller and buyer are thinking along the lines outlined above, and each acknowledges the possibility of working out a deal in which both buyer and seller come away feeling like winners, the stage is set for successful negotiations. It is fortunate that most folks do think along these lines.

It’s also helpful that buyers and sellers are not always focused on the same things to the same degree. Price might be more important to one, and the time of the sale’s completion more important to the other. Sometimes negotiations are just a matter of balancing things out.

Typical Pattern

Successful negotiations don’t usually drag on for a long period of time. There’s usually an offer, and a counter-offer which is accepted. Many times the first offer is actually accepted if it is the result of a conversation between buyer and seller where subtle negotiations took place. At most, successful negotiations are usually concluded with an offer, a counter offer, and a counter-counter offer. It’s usually a sign that the deal is not going to work out if negotiations continue much beyond that.

There are exceptions to everything, of course, and the minuet of negotiations can go on for quite some time where two people who love to negotiate are involved. However, even in those cases, most of it tends to be verbal with the written sales contract changed very few times.

The biggest point of this article is don’t get intimidated. If you stay objective, you will be able to get what you need from your home.

One of the biggest questions that we all struggle with when we are in the middle of a negotiation has to do with goals. When a negotiation includes such items as price or delivery dates, we need to understand what we want and then we need to understand how we’re going to go about getting it. This is where the zone of uncertainty comes into play.

The Zone Of Uncertainty

I think that we can all agree that in a negotiation there are two values associated with every issue that is under discussion. The first of these values is the value that you initially ask for. This can be the price that a house is listed at or a salary that is initially requested. The next value is the minimum value that you will accept. This is the value that if the other side moves below, then the deal is off.

The area that lies between these two values is called the zone of uncertainty. Your goal during the negotiation is to get the other side to agree to a value that lies within this area. Of course you’d like it to be somewhere towards the top end; however, you could live with a value that was somewhere towards the bottom end if everything else met your requirements. If you find yourself in the buyer’s role, then you are going to have to make sure that your initial offer is high enough to keep the other side’s attention and low enough to give you room to negotiate.

One of the most challenging things about establishing a zone of uncertainty in a negotiation is that you are going to want to find ways to leave yourself as much room to negotiate as possible. The reason that this can be hard to do is that your offer is going to have to be seen by the other side as being reasonable. The reason that this is so important is because if the other side thinks that you are making unreasonable demands (offering too low of a price) then this negotiation will be over even before it ever got started.

How To Use The Zone Of Uncertainty

The zone of uncertainty is a powerful tool in the hands of a skilled negotiator. Often what will happen is that you’ll start a negotiation by proposing a value such as a purchase price. The other side is going to counter with what they believe is a more reasonable value. Once they have done this, boundaries for the zone of uncertainty for this negotiation have now been defined.

You don’t always have to focus on the value that has been associated with the zone of uncertainty. Once the zone has been established, you now can bring other negotiation items into the mix. There will be a gap between where your offer is in the zone and where the other side is. One way that you can take steps to bridge this gap is to suggest something new that the other side wants or to make a compromise on some other issue that is being negotiated.

Knowledge of the zone of uncertainty can pay off for a negotiator when a negotiation starts to become tricky. They can also help out if you discover that they other side is starting to play negotiation games. The zone will allow you to maintain your perspective on what is working in your negotiation and what is not working.

What All Of This Means For You

The key to having a successful negotiation is to make sure that you have a good understanding of your goals. One way to go about making this happen is to take steps to establish a zone of uncertainty around a specific part of the negotiation. This will allow you to focus on what you want to get out of the negotiation.

A zone of uncertainty is created when you determine what the maximum value that you would either like to get or are willing to pay. Then when you determine the minimum value that you’ll accept or the value that you want to start with the zone has been established. If you can get the other side to agree to a value that falls within the zone then you will have been successful.

The zone is a powerful negotiating tool that can be used to gain the upper hand in a negotiation. The next time that you are negotiating, spend the time to determine the zone that bounds the value that you want to obtain. Knowing what your upper and lower limits are, you’ll be in a much stronger position.