Secrets of power negotiating for real estate salespeople
Buyers look for agents who are good negotiators. Because of the growth of the Internet, buyers and sellers have access to information that used to be exclusive domain of the real estate agent. We can no longer expect our customers and clients to hire us solely because we know the market. They will hire us in the future because they feel that we can negotiate a better deal.
Learning to improve your negotiating skills is the best use of your time. Consider this: if you make $100,000 a year, that's about $50 per hour. When you're negotiating with a buyer or seller you're not making $50 an hour-you're making $50 a minute, maybe $50 a second! You can't make money faster than when you're negotiating!
Negotiating isn't just for getting hostages released and resolving world crises - people negotiate all the time. In fact, as a salesperson, you're using exactly the same techniques that international negotiators use to reach agreement on world problems. Let's take a look at some international negotiations to see how the same principles apply:
The Beirut Hostage Crisis. Former U.N. President Perez de Cuellar would say that the way he got the hostages out of Lebanon was to devalue the importance of the bargaining chip. He was finally able to convince the hostage takers that they didn't hold a very good bargaining chip. Lesson: Don't appear too eager to get the listing or make the sale, because you lose power. "Yes", you'd like to have their business, but "No" you don't need it.
Getting the Israelis to the Peace Conference. Former Secretary of State James Baker would say that if you reach an impasse in negotiations, such as when the Israelis refused to come to a peace conference, sidestep the major issue of giving up land. Resolve smaller issues like the location of the meeting, or the makeup of the Palestine delegation, to build momentum. Lesson: If you reach an impasse on price, financing, or length of listing, etc., set aside the impasse issue and create momentum on little issues. Come back to the major issue later.
Let's look at some other negotiating gambits that affect you as a real estate professional:
Never jump at the first proposal
Be careful not to say yes too quickly, because this automatically triggers two thoughts in the other person's mind. Let's say that a buyer wants you to take a slightly reduced offer to a seller, or a seller wants to list at slightly above market price. If you say yes too quickly, you will probably provoke these two thoughts: 1) I could have done better. And 2) Something must be wrong here.
There's a real danger that you think the negotiation is going to be much tougher than it really turns out to be. You may be showing a buyer property. They want to make an offer on a property that is listed for $400,000. Every indication you have from the buyer is that they are going to make a really low offer, perhaps $350,000 if you're lucky. And when they suggest $380,000, you're so surprised and pleased it wasn't worse, that you make the mistake of saying yes too quickly. Actually the buyer was thinking that they would have to pay close to the asking price and didn't think you would be willing to take an offer that low. By saying yes too quickly you triggered the same two thoughts: 1) I could have done better. And 2) Something must be wrong here.
So always go through the process of negotiating, even if the first proposal is perfectly acceptable, because you always want the other side to feel they've won in the negotiations. In fact, I'd almost give you that as a definition of a good negotiator. Two real estate salespeople might be negotiating with sellers who are in exactly the same circumstances. Both come away with the same dollar figure but the 'power negotiator' comes away with the seller feeling they won, the poor negotiator comes away with the seller feeling they lost.
Positioning for easy acceptance
If you're dealing with a buyer who prides himself on his ability to negotiate, there's a danger the negotiations will deadlock at the last moment. The problem is that the ego of the buyer or seller as a negotiator got in the way. You're the selling agent and you've been negotiating back and forth on the price with the seller. Now you're only $2000 apart on the price. No buyer or seller should walk away from a real estate transaction because of $2000. You can't believe that it's all falling apart on you when you're within $2000. It doesn't make sense. What's gone wrong is that the ego of the buyer, as a negotiator, is getting in the way. The buyer may have just said to his wife, "You just watch me negotiate with these sellers. I won't have any trouble getting them down in price." Now he's not doing as well as he hoped he would, and he simply doesn't want to feel that he lost as a negotiator.
So you have to make him feel good about giving into you. Do it with a small concession made just at the last moment. The size of the concession doesn't matter, it can be ridiculously small and still be effective. It's the timing that's critical.
By Roger Dawson CSP, CPAE
Learning to improve your negotiating skills is the best use of your time. Consider this: if you make $100,000 a year, that's about $50 per hour. When you're negotiating with a buyer or seller you're not making $50 an hour-you're making $50 a minute, maybe $50 a second! You can't make money faster than when you're negotiating!
Negotiating isn't just for getting hostages released and resolving world crises - people negotiate all the time. In fact, as a salesperson, you're using exactly the same techniques that international negotiators use to reach agreement on world problems. Let's take a look at some international negotiations to see how the same principles apply:
The Beirut Hostage Crisis. Former U.N. President Perez de Cuellar would say that the way he got the hostages out of Lebanon was to devalue the importance of the bargaining chip. He was finally able to convince the hostage takers that they didn't hold a very good bargaining chip. Lesson: Don't appear too eager to get the listing or make the sale, because you lose power. "Yes", you'd like to have their business, but "No" you don't need it.
Getting the Israelis to the Peace Conference. Former Secretary of State James Baker would say that if you reach an impasse in negotiations, such as when the Israelis refused to come to a peace conference, sidestep the major issue of giving up land. Resolve smaller issues like the location of the meeting, or the makeup of the Palestine delegation, to build momentum. Lesson: If you reach an impasse on price, financing, or length of listing, etc., set aside the impasse issue and create momentum on little issues. Come back to the major issue later.
Let's look at some other negotiating gambits that affect you as a real estate professional:
Never jump at the first proposal
Be careful not to say yes too quickly, because this automatically triggers two thoughts in the other person's mind. Let's say that a buyer wants you to take a slightly reduced offer to a seller, or a seller wants to list at slightly above market price. If you say yes too quickly, you will probably provoke these two thoughts: 1) I could have done better. And 2) Something must be wrong here.
There's a real danger that you think the negotiation is going to be much tougher than it really turns out to be. You may be showing a buyer property. They want to make an offer on a property that is listed for $400,000. Every indication you have from the buyer is that they are going to make a really low offer, perhaps $350,000 if you're lucky. And when they suggest $380,000, you're so surprised and pleased it wasn't worse, that you make the mistake of saying yes too quickly. Actually the buyer was thinking that they would have to pay close to the asking price and didn't think you would be willing to take an offer that low. By saying yes too quickly you triggered the same two thoughts: 1) I could have done better. And 2) Something must be wrong here.
So always go through the process of negotiating, even if the first proposal is perfectly acceptable, because you always want the other side to feel they've won in the negotiations. In fact, I'd almost give you that as a definition of a good negotiator. Two real estate salespeople might be negotiating with sellers who are in exactly the same circumstances. Both come away with the same dollar figure but the 'power negotiator' comes away with the seller feeling they won, the poor negotiator comes away with the seller feeling they lost.
Positioning for easy acceptance
If you're dealing with a buyer who prides himself on his ability to negotiate, there's a danger the negotiations will deadlock at the last moment. The problem is that the ego of the buyer or seller as a negotiator got in the way. You're the selling agent and you've been negotiating back and forth on the price with the seller. Now you're only $2000 apart on the price. No buyer or seller should walk away from a real estate transaction because of $2000. You can't believe that it's all falling apart on you when you're within $2000. It doesn't make sense. What's gone wrong is that the ego of the buyer, as a negotiator, is getting in the way. The buyer may have just said to his wife, "You just watch me negotiate with these sellers. I won't have any trouble getting them down in price." Now he's not doing as well as he hoped he would, and he simply doesn't want to feel that he lost as a negotiator.
So you have to make him feel good about giving into you. Do it with a small concession made just at the last moment. The size of the concession doesn't matter, it can be ridiculously small and still be effective. It's the timing that's critical.
By Roger Dawson CSP, CPAE
