In real estate, price is often determined by supply and demand. Negotiations, however, are often determined by something entirely different: needs and wants.

Most of us understand the difference. We may want a new vehicle, a larger home, or a backyard swimming pool. Those are wants. A need is different. A need creates urgency and urgency changes behaviour.

The current real estate market is full of both Buyers and Sellers who fall somewhere on the spectrum between wanting to move and needing to move.

A need may be a Buyer who has already sold their property and is searching for a very specific type of home. It may be a Seller who has fallen behind on mortgage payments and is facing financial pressure. It could also be a Buyer who has secured a favourable mortgage rate and needs to purchase before that rate commitment expires.

A want may be a homeowner who is simply testing the market to see what their home might sell for. It may be an estate where the property is mortgage-free and the family has no urgency to sell. It could also be a Buyer who is browsing homes online before even speaking with a lender.

Recently, I was involved in a negotiation that perfectly illustrated the difference between a need and a want.

The Buyer’s representative attempted to negotiate aggressively on one of my listings. From their perspective, they wanted a lower price for their client. There is nothing unusual about that. However, during the negotiations a passing comment indicated that their client had already sold their home and had a specific timeline to secure another property.

My Seller, on the other hand, wanted to sell but did not need to sell. There was no financial pressure and no hard deadline. If the right offer came along, great. If not, they were prepared to wait.

As the negotiations unfolded, the difference between a want and a need became increasingly apparent. My Seller had the luxury of choice. I assumed the Buyer had a need.

In the end, the Buyer paid more than they initially wanted because the need to secure a home outweighed the desire to negotiate a lower price.

This type of situation occurs more often than many people realize.

One of the challenges in real estate is that motivation is typically confidential. The Code of Ethics that real estate professionals work under is very clear:

“Except as is otherwise authorized or required by law, a registrant shall not disclose to a third party any confidential information of a client without the client’s written consent.”

Motivation often falls under that umbrella. A Seller’s financial circumstances, a Buyer’s urgency, a pending relocation, a divorce, or a job transfer are not details that can be freely disclosed.

However, experienced negotiators often look for clues.

A preferred closing date may suggest a Seller has already purchased another home. A request for a very quick closing may indicate urgency. On the Buyer side, an unusual closing date or other terms may provide insight into what is important to them.

This is one reason we always advise Sellers not to discuss their situation with Buyers they happen to meet in the driveway or while leaving for a showing. Many people are simply trying to be helpful, but an innocent comment can unintentionally weaken a negotiating position.

The reality is that both Buyers and Sellers are usually trying to achieve the same goal: maximize their outcome.

This becomes especially interesting when properties are intentionally listed below market value in an attempt to generate multiple offers. Recently, I noticed a property that appeared to be listed approximately $50,000 below market value. After receiving six offers and reviewing bids that were already in the expected market-value range, the property was taken off the market and reintroduced at a price approximately $115,000 higher.

A quick review of the Oshawa market also showed that roughly 26% of active listings were holding offers in an attempt to create bidding competition.

For Buyers, the best approach has not changed. Determine the property’s value through a market analysis and make decisions based on facts rather than emotion. If multiple offers occur, submit an offer based on what the property is worth to you and what the market evidence supports.

For Sellers, the same principle applies. Given that many homes in Durham Region are currently selling close to their asking prices, pricing a home near its market value remains one of the most effective strategies.

One interesting trend in today’s market is the absence of sale-of-property conditions. Despite inventory levels being higher than they were a few years ago, very few Sellers are accepting offers contingent upon the buyer selling their existing home. In fact, of the homes sold in South Durham Region over the past week, none were reported as being sold with that condition attached.

Ironically, that remains one of the least stressful ways for a homeowner to move.

Most Buyers and Sellers fit somewhere between a need and a want. The transactions that raise eyebrows, however, are often the ones where someone’s need becomes urgent.

When that happens, market value may still matter, but certainty becomes priceless.

If you are planning a move and would like the negotiation strategies honed with 40 years of experience I can be reached at lindsay@buyselllove.ca or 905-743-5555