How to negotiate when buying or selling a home in Hawaii

One of the most important skills a Realtor must possess is that of negotiation. It's one thing to market and make a house look nice, and even to get people to bring in offers, but the bottom line is almost always the price. (Sometimes it's the timing.)

So let's take an example from my recent negotiations. Suppose you're my client on a purchase, and we want to buy a house that is listed for $700k in Kailua. You like the house and you're willing to pay about $680k for it. What should you offer?

Not so fast. The fist step is to find out as much information about your seller as possible. Is he buying a condo somewhere? Is he in escrow already? Is he moving to the mainland? Has he already bought another house in Kaneohe? Is he paying two mortgages? Is there a divorce or a marriage? Kids? Job transfer, layoff, or promotion?

All these things can be discovered in a few short minutes by talking to his agent. If his agent is smart, he won't reveal a lot, but you would be amazed at what people are willing to disclose once you show them that you are a nice person who is not going to be disrespectful.

So based on the information you get about the seller, you might realize that the seller really wants to close fast, or close slow and have a big non-refundable deposit. Or you may find that the seller is in a bind on his mortgage, and it would help if he could get some rent from you before closing.

The point being, sometimes you can put things in the contract that are about as valuable as money. I've had sellers take very low offers because we offered to close quickly, or because we offered to move in and pay rent up front.

I've also had buyers pay more to move in at their timing, which is sometimes slow. I've had buyers willing to pay more if the seller is willing to stay in the house after closing and pay the buyers some rent.

So take our Kailua house for $725k. If you want to pay $680k, and you know the seller is motivated, what should you offer? Probably something closer to $660k, so the seller has room to counter offer. But first, you should check and see if the price is going to be offensive, and cause them to not respond.

Usually I'll prepare and offer and then call the listing agent to see if our offer is going to result in some bad blood. Often, just talking about it ahead of time can make it easier for the seller. If they know that we aren't trying to be offensive, then it can make things smoother. In Hawaii, there isn't really a standard amount that you can offer below an asking price, but when I represent sellers I tell them to expect low offers that we will counter offer and get to where we want.

When I'm functioning as a listing agent, I tell my sellers to take a position of strength. Do we need to hold out for a good offer? Maybe we need to keep countering on low offers to keep the process going, so that other people who are interested can know that we already have an offer.

When you're negotiating the difference of tens and hundreds of thousands of dollars, you want a strong Realtor who is willing to do what it takes to get the best deal for you, whether you're the buyer or seller.

It's kind of like playing Poker. Sometimes you have to act strong when you're weak. Maybe that's why I like it.

As for the house in Kailua, I can't disclose the price yet because we're still in escrow. But we did pretty well...