Buyers negotiate against a seller. But the seller is not the enemy. Other buyers -- real and imagined by the seller – is who will drive the price up. In some markets around Boston, there is strong demand; in others, there is not. Know where you are shopping. If there is lowered demand, there is more room for negotiation, since real competition is less likely, so phantoms are hard to conjure.

A house is a house and it costs what someone will pay for it. Whether the seller owes 120 percent of its current value or 10 percent of its current value, the price is more or less the same. Buyers are not helping themselves by counting the seller’s profit. I frequently see buyers who have the seller’s purchase price in hand before seeing the house. I hear things like, “he’s paid only $175,000 for it, so he’ll be free to go down.” Most of the time, the buyers are looking at the sale price and not the debt level (which could be much higher.) Also, the buyers are not subtracting for improvements. It is wishful thinking that a seller will take less profit, because he has equity. Even if he financially can take less, why would he share potential profit with you if there’s another buyer who will pay more?
Knowing the point where a seller will take a loss is helpful to negotiation. If the seller is close to the bone, know where the break-even point is. Break even is a powerful anchor for sellers in this marketplace. The problem here is that break-even is an emotionally-driven number that is not always logical.
One seller will be content only if he/she can close with the initial down payment intact. Another will rationalize that they are even if they close with their initial down payment intact, minus rental cost for the period that they owned the house. Some will see break even as leaving the closing table at zero or with a tiny payout.

When negotiating against a seller, you should get an estimate of the seller’s position. Much of the debt information is available in public records. Between MLS and public records for permits, there is pretty good information about improvements. Frequently, the listing agent can get accurate information about what work the seller did, whether the seller did his/her own work or hired out, and whether there are permits.
If you can find out the seller’s motivation for the sale, this can also inform how hard you can push. A seller who is buying something else, has bought something else, or is relocating will be more amenable than a seller who could move this year or next year or sometime thereafter. Listing agents are often a font of this kind of information.

These are the most general things I can think of – that are not about the buyer’s motivations -- that help buyer’s position themselves for negotiation. Is there anything else that I missed?

Have you been frustrated by attempts to negotiate that would have been helped by this advice? What happened?