The art of bargaining in real estate

In today’s world most goods or services that are offered on the market have a fixed asking price. They are offered for sale without the option to negotiate, which is called “bargaining”.

But it hasn’t always been that way and we seem to have lost the old concept of bargaining and now call it negotiation. It is still the same thing.

Wikipedia defines bargaining as: “Bargaining or haggling is a type of negotiation in which the buyer and seller of a good or service dispute the price which will be paid and the exact nature of the transaction that will take place, and eventually come to an agreement.”

In real estate today that pretty much sums it up though I am not very comfortable with the term “dispute”.

Either way, the fact is that real estate purchases have always been negotiable. The seller asks a fixed price or puts their property up for auction to the highest bidder. So we’re back to a sort of bargaining again.

But you see there is an important element involved in this. It is called perception of value, and this is the most important ingredient in the practice of bargaining.

It is about the perceived value of a material object. As in Murphy’s Law, what the buyer believes is usually at opposite ends to what the seller believes. The concept of value is different for everyone involved in a purchase or a sale. It depends which side of the coin you are on.

There is an old saying that “Beauty is in the eye of the beholder.” And this holds true for anything you want to buy as a consumer.

Would I have paid $120 million dollars for Edvard Munch’s iconic masterpiece The Scream? No. But that is just me, and if I had that sort of money I would now be sitting happily under a coconut tree with Clive Palmer sipping cocktails in Bora Bora.

In the real estate merry-go-round sellers offer their property for sale, not just based on its current market value but on the value they place on it themselves. Similarly, buyers will value it based on their own perception. So we are back to bargaining again.

I love a bargain and don’t we all. The problem is that sellers want to make a profit. It is all about money, and money makes the world go round.

Tim Mansfield is a 30-year global veteran in the real estate industry and founder and CEO of Sydney-based buyers’ agents PrimePropertyBuyer. You can follow Tim on Twitter by clicking here.