In real estate, you don’t get what you deserve, you get what you negotiate. It’s the bread and butter of every real estate agent around the globe therefore every agent needs to master the art of negotiation. The number of deals you close in a year as well as the commission you make from each deal depends on your ability to negotiate , effectively.
Most agents get into negotiations without doing their homework and that’s why they FAIL. Knowing how to negotiate will enable you to close a deal quickly so you can work on the next one.
Now, imagine going into the negotiation with the buyer or seller agent knowing exactly:
- What you and your clients want?
- What your opponent wants?
- What your asking or offering price will be?
- How are you going to justify the price?
- What your strategy would be to achieve a win-win outcome?
If you want to become a better real estate negotiator, then keep reading. This is a 3 part series on real estate negotiations in which we will share some common (and some secret) strategies which will help you become a skillful negotiator.
Keynote 1 – Negotiate From Position of Power
You absolutely cannot make the mistake of giving away your position to your opponent during negotiations. If you are representing seller, you should always start by asking how much the other party is willing to pay for the house rather than telling them this is exactly what you want.
I know, you already listed the property and price is there on the MLS but even that price needs to be adjusted for negotiation. Negotiation is a give and take bargaining process, both parties will be going back and forth from that initial price point and that is why it’s important to ‘shift’ that point so you have more breathing room during negotiations.
Now, we are not saying be a douchebag and ask an extremely unrealistic price or make a lowball offer but move that price point enough that you have ‘wiggle room’ when you are negotiating.
Keynote 2 – The Bracketing Effect
Your proposal should be structured in a way that you and your opponent end up splitting the difference so you still get what you want. Say the buyer is offering $470 000 for a condominium in the downtown Mississauga area, and you can live with $4,80,000 while using the bracket effect, you should start the negotiation at $4,90,000 . This allows your initial proposal to be an equal distance from the other side’s proposal.
This negotiation technique will only work if you get the opponent’s position to go first. Once the offer is on the table, you are able to bracket the negotiation with your counter offer.
Keynote 3: Leave the first “Yes” at Home
There is no last coca-cola in the desert. If you are representing a seller in negotiation, don’t be too hasty and say ‘yes’ to the first offer you get on the house just because it’s close or even a little better than what you were expecting.
Once you commit and then get a better offer later on, it might be too late to go back and change your decision. Always wait for at least 3-5 offers (within a reasonable amount of time frame) before you make a decision. A hasty ‘yes’ can cause you a lot of regret and there is no medicine for this emotion.
Keep in mind that when you say ‘yes’ to the first offer or counteroffer you have already lost!
Focus on getting the best possible price – observe and try to negotiate with the other party and see if you can get a better price. If it’s really good offer or asking price that you probably won’t get again, then sure, go for it but if you think you can do better, then sleep on it and keep trying.
Keynote 4: The Flinch Negotiation Tactic
No, I am not talking about when your older brother pretends to throw his basketball at you. In real estate negotiations, your body language is extremely important and can help you get a better deal for yourself.
So what is “The Flinch Negotiation Tactic”?
It’s an expression of shock or surprise or even disbelief at what you just heard.
You can express that flinch subtly like a grimace, squinting your eyes, flinching your head back in surprise or even express it verbally.
You should always flinch in surprise in reaction to a proposal from a buyer. 70% of people that you will deal with as a sales negotiator are visual learners and will react when they see a flinch and might change their position.
However, keep in mind that experienced negotiators know that tactic and might counter your flinch with a flinch of their own, leaving you in a very awkward position.
Keynote 5: Be the ‘Cautious’ Seller
As a powerful real estate negotiator , you must play the reluctant seller role.
The reason for this is when showing your opponent that you don’t want to seem desperate to sell the house, you lose your right to negotiate from position of power – seeming desperate.
Being a little reluctant can help you because your opponent will then have to change his stance and accommodate you to return to status quo. If your opponent is inexperienced, he or she might even give away his/her bargaining range immediately.
Keynote 6: Stay Focused
Everyone has different personality. Some people are more analytical and some are more emotional which is why everyone negotiates differently.
- People with ‘Driver Personality’ are very assertive and not that responsive.
- People with ‘Expressive Personality’ are assertive as well as responsive.
- People with ‘Amiable Personality’ aren’t assertive but are very responsive.
- People with ‘Analytical Personality’ believe in facts and figures, they are not assertive, they are not responsive and they don’t like to be pushed around.
As a negotiator, it’s important that you don’t get offended with the way your opponent approaches negotiation because it just might be their personality. During negotiations, you have to discuss issues with a calm and collected approach and avoid getting angry or responding to the anger shown by other party. Try to find the common ground and focus on resolving the issues. Don’t let your ego ruin the negotiations.
Being calm and concentrated on the issues of the negotiation allows you to fend off distractions brought out by the opponent.
We hope that you found the negotiation tips that we shared in this blog useful. Now that you understand these basic negotiation techniques, you can use them in your field when you are representing a buyer or seller. Try to educate them as well so both of you are on the same page.
In the next two parts, we will be taking a look at the middle and end stages of this process. If implemented properly and to its true potential, it will be possible for you to become a top sales negotiator.