Negotiating is a big part of real estate. Yet, surprisingly, many, if not most agents don’t know the first thing about how to properly negotiate. And many agents who think they’re good negotiators, usually end up negotiating their commissions down to get the deal done, or upsetting one or both parties along the way. The unfortunate trap is that, generally, considering yourself to be a good negotiator is egotistical. Good negotiators know that there is no place in negotiations for ego.
So here are some tips to help you become a good negotiator, so to speak:
1. Remove your ego – This is a huge stumbling block in negotiations. You’re not trying to win here, you’re trying to successfully bring a buyer and seller to an amicable financial agreement. It’s not about you being smarter or better than the other agent. It’s not about you defending the price of your listing. It’s not about you outwitting the buyer and/or seller. It’s not about you at all. It’s about the buyer and seller coming to an agreement and happily moving forward. Get out of the way.
2. Win-win – I’m sure you’ve heard this before, as it is pretty much the most basic rule in Negotiating 101: The best negotiations end with all parties feeling like they won. And by that, I don’t mean feeling like they won and the other party lost. As I stated above, both parties need to feel they came to an amicable agreement and want to happily move forward.
In this market, I’m sure you’ve seen, heard, or been involved in deals where one party gets out of the deal almost right after they agreed to it. That’s because that party felt forced, coerced, cajoled, bamboozled, or anything else other than being in an amicable agreement about the price.
And beware the deals that stay together like this. They usually end up with one, or both of the parties going after your commission. At the very least, you may end up with a past client that doesn’t want to deal with you, or refer you business ever again.
3. Who are you negotiating for/with? – You need to realize that you’re a third party negotiator. You’re not selling your own house, and you’re not spending your own money to buy the house. You represent one, or both, parties in the transaction…you, yourself, are NOT a party in the transaction. So don’t beat up your client, because they’ll remember what you said. Which means, when it’s all said and done, you may end up with no deal, or a sour client you can’t call anymore, as I mentioned above.
4. Don’t be attached/Don’t be the most attached – This is a very basic idea, and one of the hardest to practice. You’ve done the work, you’ve brought a buyer and a seller together, now it’s time to get paid, right? Wrong. You get paid when you successfully take a deal to closing. The real truth is that you need to be doing consistent lead generation, daily, so that you have enough business such that you don’t feel the need to be attached to any one specific deal. The less attached you are, the better you’ll negotiate.
And, by the way, don’t be the most attached party in the deal. There may come a time where your client doesn’t call you back as fast as you want, or the other agent doesn’t get back to you for a day or so. If you find yourself making more than one phone call to any of them, you are now the most attached party in the deal. That means that you want this deal more than anyone else involved, more than the buyer and/or seller! That’s definitely not good for negotiating.
Also, everything is about perception. Even though you are the listing agent (example), when you repeatedly call your client for a counter offer, the seller’s perception is that you are the messenger for the buyer, and they’ll read your multiple calls as BUYER attachment. And if they think they have an advantage over the other party, if they think the buyer’s really anxious to get the house, they’ll be less likely to counter, won’t they? At the very least, they’ll start playing real hard ball, which could impede the negotiations.
Many an attached agent has killed a deal before it got together because they were more attached than the actual buyer and seller. The clients misread the agent’s attachment for the other party’s attachment and changed their negotiating tactics accordingly, resulting in no deal.
5. Align with the parties involved – Again, this is not a contest. You need to be on your client’s side, and you need to be on the other agent’s side. To many agents think they’re at war with the other agent, when that’s the dumbest thought process you could have. Wars have casualties, not good outcomes. You need to understand where all parties are coming from, and align with them.
If you have the buyer, really understand how a buyer might feel in this market. Everyone’s telling them it’s such a buyer’s market, yet you want them to pay $5,000 more. How would you feel?
If you have the seller, really understand how they might feel after their house has been on the market for 6 months, reduced multiple times to where they’re barely going to break even, and you’re telling them to come down another $5,000.
And, finally, treat the other agent with respect and honesty. Align with him/her. You’re both working towards a common goal. You want the other agent to negotiate FOR you and your client, not AGAINST you. “I’m really sorry, Bob, my seller’s are just about at break even point. They are down as far as they can go, and really want to sell the house to your buyers, but can’t really go lower. Do you think you can get your buyers up a little more?” will get the other agent on your side as opposed to “This is priced right, and they’ve come down enough. You need to get your buyers up.”
6. Time – Don’t stop everything else you should be doing (ahem…getting more business), and don’t be in such a rush to talk to your client. Remember, you don’t want to be, or appear to be the most attached party in the deal. So, to again put yourself in your client’s shoes, imagine if you get three calls, with three counters from your agent, in 3 hours. Regardless of if you’re the buyer or the seller, doesn’t that make you feel like the other party really, really, wants the deal to come through? Wouldn’t you naturally want to withdraw from that barrage, and maybe even take a day or two to think about things, thereby letting the other party sweat a little? Exactly.
I promise you, if you take your time, you’ll find that everyone will be calling you. You’re client will call you to find out if there’s any new news. The other agent’s client will be calling them, and the agent will be calling you, etc. I’m not saying purposely avoid calling your clients, or the other agent, I’m simply saying that the quicker you make those calls, the less emotional attachment the parties will feel. Studies have shown that people buy (sign contracts) on emotion, it’s that simple. If someone feels like they’re losing the house they want, or the buyer they need, they’ll be more apt to negotiate fairly.
I’ll continue this post with six more tips in my next post.
In the meantime, if you’re interested in learning about negotiating, what to say and how to say it, objection handling, or any other sales training, visit our site at www.yourethedifference.com, or call us at 609-601-1296 for a free, no-obligation coaching call.