Every negotiation is a communication.

What does your offer say to the seller? Does the seller’s response tell you what the seller meant to tell you…or did you take it another way entirely? Which negotiating moves will bring you closer together, and which will break you apart? Will what you do increase mistrust…or will it build confidence?

Here is a fictional example of how a seemingly innocent act can convey the wrong message, with profound results:

Johnny was a plumber who — starting with a single property which he bought at auction and rehabilitated — by the time he died, owned three, two-family homes whose steady tenant rentals provided a modest retirement income. In return, Johnny always kept everything up, and provided a safe, warm environment for the folks renting from him. Before he died, Johnny had sold two of the two-unit homes to people formerly renting from him, thereby leaving just one two-family house for his estate to deal with. His bereaved daughter, Marilyn, was appointed to execute the estate; and so she listed the remaining two-family with a local broker, subject to the Probate Court granting a License to Sell.

After a few weeks, they received an offer. It was $2,500 below full price, but the listing agent advised caution about the financing, which was to be a non-conforming loan with a low down payment. The young couple, Mary & Sam, making the offer seemed to really want the house, and they made it clear that they were offering the most they could, given their financing qualifications. In the meantime, the listing agent explained to Marilyn that a second buyer, Francis, whose cash flow was plainly healthy had viewed the property on the same day that Mary & Sam’s offer came in; and — the agent said — it might be best to see whether he would also make an offer.

Both buyers were representing themselves, and therefore fully responsible for their own negotiating strategies.

Sure enough, the second buyer did make an offer: It was $2,000 below full price, which was $500 higher than what Mary & Sam had been able to bid. With 20% down and conventional financing, the agent advised Marilyn to take it…but Marilyn hesitated. The agent warned her that the expiration dates on both offers were approaching, and that she might end up losing the higher offer. Marilyn asked her agent whether she could end up losing both offers.

“I doubt it,” the agent replied, “Mary & Sam really want the house and, frankly, they are in no position to pick and choose. As long as there is a chance that they could win the bid, I don’t think they would walk. But Francis might. His financials are strong enough so that he’s likely to feel that he can write his own ticket, and I don’t want you to lose the better offer.”

That was on a Friday, and Marilyn took an extended weekend to visit her cousins in Milwaukee. She just wanted to put aside the whole business of selling the house so she could go somewhere and cry and be with people who love her. On Monday, she was still in Milwaukee and Francis was getting frantic. By Tuesday, he couldn’t stand it any more, and he called the agent to ask why he had still not heard a response to his offer. The agent told him that the seller was still undecided and she apologized for not being able to give Francis an answer yet.

Francis was puzzled. The long delay — almost a week by now — made no rational sense. If the other offer was better than his, then obviously the seller would have taken it by now. Francis decided that the seller was playing negotiating games and he would call their bluff. So he phoned their agent:

“Look,” said Francis, “I just can’t wait any more. If the seller cannot give me an answer by 5 p.m. this afternoon, I’m withdrawing my offer and I want my deposit back.” There, that should do it, thought Francis.

But his ultimatum backfired. The seller’s agent and the seller became convinced that that Sam was a shrewd negotiator, and that, even though his offer was $500 higher than Mary & Sam’s, as soon as any little problem might come up — say an inspection issue — Francis would be likely to try to renegotiate and threaten to walk if he did not get his way. Francis’ phone call spooked the seller (and offended her) and so she decided that she felt more comfortable with Mary & Sam.

Francis’ deposit was returned, and today Mary & Sam are living in their lovely home (which has appreciated significantly in value).