Every day we are being hired by clients to help them buy or sell real estate. Everything we do as agents is geared towards getting our clients to the closing table. The degree of your success can depend on your skills as a negotiator yet so few agents take courses specific to increasing their skills or ask for special training on how to be a good negotiator. I have seen buyers lose a house they really wanted because of the poor negotiation skills of their buyer’s agent.
I have seen listing agents be so unbending and domineering that the buyer’s agent gave up and suggested their buyers look elsewhere. A good negotiator keeps emotion at bay, is patient, asks questions and tries to substitute options or trade offs. Although everyone can’t always win every point, everyone can come away feeling they got ‘something.’ Say your client agrees to pay a little more in price but the seller throws in a home warranty. This could add some value to the price they are paying and the benefit to the buyer is they won’t have to worry about spending all their available cash and then having the dishwasher or furnace go out.
By the time you get to the negotiation table you should know your clients wants and needs by asking them lots of questions. If you understand what are their “must get” versus “we would like but it wouldn’t be a deal breaker”you can negotiate from a postition of knowlege rather than a guessing game. Consider the benefits of planning your strategy so you can give focus to the negotiation and help guide the parties to a successful conclusion.
Begin each negotiation by setting the stage. This is when trust is established and it is the time to set the atmosphere. If trust is not established, the negotiations will usually fail. It’s usually more productive to create a friendly, cooperative climate. Avoid getting down to business too quickly.
Here are some actions we can do to establish a cooperative climate when we approach a negotiating situation:
Shake hands
Establish rapport
Show empathy
Have a positive attitude
Keep the atmosphere warm and friendly
Show respect
Things we do that might influence the negotiating climate in a negative way include being too demanding, close-minded or unresponsive to the other party’s needs and interests. If you are successful in establishing a cooperative climate, you will never have to negotiate with a stranger. Remember many times the tone for the coming negotiation is set when the two agents first begin their communications. If it takes one agent 4 days to get the other agent to respond to a phone call, the impression is ‘great I am going to be chasing this agent for responses throughout the whole deal!” If that other agent treats our questions with impatience or unimportance, we are immediately going to label that agent as ‘difficult’ to deal with. In representing our clients our job is to be cooperative, enthusiastic, encouraging and helpful to the other agents. If both sides practiced this was of doing business think how much fun negotiating could be.
As a guide your negotiation, take a look at these negotiating rules.
Rule 1: Separate people from the problem. Often, during the negotiating process, emotions become involved. Then it becomes necessary to deal with emotional issues using emotional means.
For example:
If the buyers or sellers display high emotions, allow them to let off steam. Don’t react to their outbursts. Try to change the focus of the discussion to a less emotional area.
If they have inaccurate information or inaccurate perceptions, you may need to educate them. Try to understand their point of view and where they are coming from. Remember that understanding their point of view is not the same as agreeing with it.
Use written documentation and third-party information to change their perception. Discuss each other’s perceptions and never say “You’re wrong.”
If misunderstanding has occurred, look for ways to improve communication. Listen actively and give feedback when appropriate.
Rule #2: Show respect.
You are not going to necessarily see eye to eye with all parties in the transaction, even your own customers/clients. If a negotiation can fail, it will fail here. When you lose respect, you lose the ability to effectively do your job, to negotiate on behalf of your customer/client. You must maintain your integrity and respect, even in the most difficult moments. This is the time when professionalism counts. Show respect by observing the following:
Listen and be courteous
Don’t be defensive of your position
Express appreciation for their time and effort
Ask open-ended questions
Emphasize your concern with meeting their needs
Communicate, communicate, communicate
Rule #3: Focus on interests, not positions.
A “position” is a statement that reflects the decision “here’s what I want.” When negotiators bargain over positions, they tend to lock themselves into those positions. A person’s “interest” can be uncovered by simply asking why. When you
ask why, make it clear that you are not asking for justification, but seeking solutions and trying to understand what interests lie beneath the position they defend.
Often Open-ended questions can help identify underlying interests: Ask the why, what and when questions.
Why is that important to you?
What is driving that concern?
When could you feel comfortable ___?
Positions and Interests are demonstrated in the following buyer example:
Position: (What I want) “I have to close in 30 days. A closing of 45 days simply because the seller can’t move until then is just not an option.”
Interest: (Why it’s important) “We have given notice to the apartment manager and have to be out in 30 days.”
Rule #4: Seek options.
Once you understand the interests that are driving the stated position, explore all the options that might give a satisfactory solution. The following options address the interests of the purchaser above:
Options:
Close in 45 days and negotiate for the buyers to remain in their apartment for an additional 15 days.
Close in 30 days and negotiate for the sellers to find interim housing upon closing.
Close in 30 days and negotiate for delayed occupancy, with the sellers paying rent to the buyers for the additional 15 days until they can move.
Close in 45 days and negotiate for the sellers to cover the buyers’ extra 15 days of rent by either reducing the sales price, paying additional closing costs, or paying the buyer directly. It is important when creating options not to be critical or judgmental but to open your mind to the possibilities. Explore each option individually and find the best solution that meets the needs of both parties.
What would happen if you don’t get ____?
In bringing the negotiation to a conclusion, it is important not to give up because of sustained frustration. This is where the top negotiator shines with mental toughness. Look for ways to make the other person feel like he has a win so he will
compromise on issues he has been stubborn on. Establish finality gradually but firmly. Two little words can be very helpful in this trade-off process: “if” and “then.”
For example:
If we could agree to that price, then would you agree to a 90- day escrow?
If the sellers would agree to paying interim rent, would you be willing to close in 45 days?
Negotiations often fall apart for the following reasons
•Lack of confidence
•Overconfidence
•Not recognizing the other side’s situation
•Viewing as a win/lose situation
I hope you will all think back over any failed negotiations and review why they didn’t work, what made you uncomfortable, what you could have handled in a better way and was there any way you could have negotiated for a different outcome?
Now take a look at your successful negotiations..the sales that closed. What did you do differently to secure the sale? How was the interaction with the other agent different? Was there something that you said or did that you felt really good about? A negotiation is successful if it is efficient, produces a wise agreement when agreement is possible, and improves or at least does not harm the relationship between the negotiating parties.
Building a relationship of trust, understanding, respect and friendship can make later negotiations smoother. Base the relationship on accurate perceptions, clear communication, appropriate emotions, and a forward looking outlook. Trying to focus on the basic interests of each side, rather than on “winning” or “losing” will likely produce more efficient results. Keeping an open mind yet being well prepared pro¬vides an opportunity to invent options which could serve the interests of both sides and speed up the negotiation.
I hope this has given you some negotiation tips that you can use and will help you close more sales.
Have a Safe and Prosperous Weekend
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