LEARNING EXERCISE: BUYING A HOUSE
Yes, this is definitely a distributive bargaining situation. Base on my opinion, when it comes to purchasing a house, we would want to get a good property at an inexpensive value and have a good home appreciation value so that we can invest in a house property with no future worries. Buying a home need a thorough look as it will most likely be a lifetime investment. We always want to get the most value of our hard-earned money. Base on the case studies, let’s say if they are not willing to considered or negotiate the price of the house that I wanted to buy, I can always walk away and find another house. Because in this situation we as the buyer wants more goods form the seller, and the seller in the other hand wants profit from us as the buyers. So I considered this as a distributive bargaining zero-sum negotiation where both of us did not get any of what we want, or in the other hand let’s say if they agree to negotiate about the price but they did not have many choice but to agree in the price that I offer to them, this is a win-lose negotiation where one party’s gain is the other party’s loss.
There are a few basic step that I need to do to determine or calculating my reserving price so that I can negotiate the best price for my dream home: Step 1: Write down the amount that i can afford to pay each month. This may be close to what I will be paying now, or what I comfortably willing to spend per month on housing costs. Step 2:Calculate tax and insurance costs. Use a factor of.68 for areas with high tax and insurance costs;.85 if tax and insurance is relatively inexpensive; or use the standard.75 for a rough estimate. Multiplying this rate by the amount in Step 1 will give me my affordable loan P&I payment. Step 3:Calculate my typical loan term and interest rate. Write down the loan term in years and the interest rate. I will need to locate the appropriate payment from the...