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Be a Price Negotiator: Maximize Your Home Sales Profits

The most certain way to maximize your profit requires making the best decisions. Without expertise to gather and weigh the choices, most decisions fall into the same traps in an attempt to save money.

Strategy In Brief

Spectrum of Uses: Broad

The Problem

The most certain way to maximize your profit requires making the best decisions. Without expertise to gather and weigh the choices, most decisions fall into the same traps in an attempt to save money.

The Reason

Without an understanding of the trade-offs to make high quality decisions, people naturally resort to be the least costly alternative.

The Solution

Achieve highest profits by minimizing sales costs but never at the expense of maximizing sales performance.

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-$80,000 to +$80,000 for a $800,000 home.

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A Real Estate Transaction is a Complex Sale

Most people wish to sell their home quickly and with minimum hassle. Most buyers are in complete agreement. However, selling and buying a home is anything but simple. It is classified as a complex sale. Treat it as a simple sale and you pay a lot more. Some would call it a big mistake.

Treating a home sale as a simple sale is like trying to pound a square peg into a round hole. It won’t work well and it’s expensive. Typically, this paradigm costs sellers and buyers 5 to 10% if their agent operates under a Simple Sale paradigm and their counterpart’s agent does not.

Even so, too many home sellers and agents still try to make it simple. So, make certain you are working with an agent that truly understands and practices the Complex Sale. You will benefit tremendously, especially when they are negotiating against a “Simple Sale” agent.

Back to the Source-Follow the Home’s Digital Footprint

Let’s follow the story of a home that goes on the market. Think of this as the life of a salmon. Have you ever watched a nature show about a salmon’s life cycle? Intriguing, isn’t it? Salmon live in both freshwater and saltwater. They are famously known for their treacherous climb upstream from the ocean to return to their spawning grounds.

A Simple Sale is One-dimensional Thinking

The salmon only see the world in one dimension, upstream, and only in the water. Call it a “Simple Sale” view of the world. 

The Complex Sale is Strategic

The bear sees a very different three-dimensional world. Not only does he see above the stream and into the stream, he is also free to move up and down the stream. He chooses his position and he chooses his moment. Call it a “Complex Sale” view of the world. 

The Art and Science of Negotiating

Never mind the big claws and sharp teeth. It’s easy to see that the bear has tremendous strategic advantage over how the game will play out. The bear is operating strategically whereas the salmon has a simple goal.

When we consider human behavioral economics, it’s anything but simple. Even the bear’s job looks a lot easier. There are a myriad of decisions before us, each one with a cost and a risk. Now add several people negotiating over a highly valuable asset. That, by definition, is a complex sale. Anyone who wishes to treat this as a classic “simple sale” with known costs and risk will surely pay dearly. But there’s good news!

Though every home sale is as unique as the people involved, the process of negotiating may be put into a system. Think of it as a chess game or a game of poker. There are rules of engagement and there are common behaviors that people share.

Price Negotiator is your playbook for this game. Strategies are detailed for different scenarios and different times in the game. By applying behavioral economics to overcome human cognitive biases (some call it faulty thinking), you will gain tremendous advantage in managing the direction and results of the other party. This is the art and science of Price Negotiator.

Have them for Lunch

Real estate transactions transfer ownership and control of a million dollar asset (more or less) involving a dozen or more parties. When consumers and their agents fail to fully appreciate its complexity, they are operating under a limited paradigm-like a salmon.

Tremendous opportunities appear when you make better choices by understanding their value impact. Understand a wider variety of options based on superior experience and information, you can expect your outcome to achieve the highest range of profitability. That is the power of using Price Negotiator with an experienced agent.

Price Negotiator

Seller’s Agent AQ:  110 = 100 x [(80+800,000)/800,000]

The Seller’s agent AQ: 100x [(sold price/market value)] 

The Seller’s agent with a high AQ (105 to 110) may likely leverage your home sale up by 5% to 10% over market.

On the other hand, a web based “sell your home for cash” service, typically buys the seller’s home at 10% under market or more.

 

Buyer’s Agent AQ:  110 = 100 x [800,000/(800,000-80,000)]

The High AQ Buyer’s agent (AQ=110) may negotiate sales price down by $80,000.

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