Time Investment: a Real Estate Negotiation Technique
By Steve Gillman - 2008 - 2013
You have probably heard the expression, "time is of the
essence." It even says as much on most business and real
estate contracts. The steps in the process of buying and selling
a house or other property have to take place in a timely way
-- by the specific deadlines laid out in the contract. These
deadlines may or may not be advantageous to you depending on
But before the contract is finalized and the deal is closed
there is a period when you are negotiating various matters, and
here time can definitely be used to your advantage, if you know
how to use it. Whoever controls or understands the elements of
time involved has the better position. There is a lot to this
subject of time and negotiation, and we're going to cover one
When I was a real estate agent, one of my less-pleasant experiences
involved selling a home to a lawyer. The seller, my client, was
a real decent guy, and I wanted to do my best, but I was new
to real estate, and this buyer/attorney knew all the angles.
Without getting into the various dirty tricks he used (there
were several), I'll just say that the buyer had everyone involved
angry, frustrated and worn down.
As a final blow, he arbitrarily decided that he wanted the
price lowered by another $5,000, long after the purchase agreement
had been signed by both parties. The seller was almost ready
to throw away the whole deal, but he had been trying to sell
the home for two years at this point, and we had been working
with this buyer for months. None of the agents or brokers involved
wanted to see all their effort go for nothing.
There were three agents under two brokers involved in the
sale. We all agreed that suing the buyer wasn't worth the trouble,
so instead, we gave in. The seller had enough of the buyer's
tricks, and refused to compromise further (and who could blame
him), so each of the three agents and two brokers agreed to forfeit
a $1,000 of the commission -- $5,000 in total -- just to make
the deal close. This is sometimes referred to as a "commissionectomy."
This is an extreme example of using what is called "time
investment" to one's advantage. After investing so much
time, none of us wanted to lose everything. The lawyer knew that,
and used the fact against us. In this case, there really was
nothing in the contract that allowed him to renegotiate the price,
making it unethical in my mind. Still, it was effective.
In other cases, it is just good negotiating to get the other
party involved for a while and then push for concessions. Consider
the simpler example of buying a car; if you want to get the best
price, do you think you'll get it after spending two minutes
with a salesman? No, you let him invest two hours or more (possibly
spread out over two or three visits) showing you cars, and by
that time he'll be begging his manager to let the car go for
your low offer.
This is just as true in real estate. If you are dealing directly
with a seller, hold off mentioning an offering price until you
have spent some time with him. Get a seller to the point where
he knows you and thinks the property is sold, and he will not
want to throw away that time investment. That means you can push
a little harder to get what you want.
You can also remind the seller about time, to let him remember
the time he has already invested. To do this politely, say something
like "Look, neither of us wants to lose the time we've spent
on this and start all over, so why don't I..." Then offer
some small concession.
Notice how he is subtly warned that he could lose his whole
time investment with nothing to show for it. The words "start
all over" may even scare him. You set the scene, and then
you offer a way out. This is non-offensive if done right. You
say "Neither of us..." to let him or her know that
you're both in the same situation, and it's not just you making
a threat. Once a person has spent or "invested" time,
he is more likely to accept a lower offer or terms that he might
have refused earlier in the negotiation.
Note: There is a chapter
on real estate negotiation tips in our free book on selling
a home. Of course they are oriented toward selling more than
buying, but you might find something useful there.
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