Most Agents have little or no specific training in negotiating yet it is a major component to an Agent’s success. Negotiating is a skill like any other that is awkward at first and improves with practice. Some of these rules will take some time to implement effectively. Others you will be able to apply immediately. (Some of these rules refer to the situation where you are presenting and negotiation directly versus through the other Agent.)
Rule #1: Do not go back and forth between the Buyer and Seller more than twice or you make them crazy. At and after the third round your chance of making the sale drops dramatically. In the first round the buyer and seller are thinking about buying and selling the home. In the second round the buyer and seller stop thinking about buying and selling the home and start thinking about the money. At and after the third round they begin to resent each other. Both Buyer and Seller lose site of the home and money. They begin to make it personal and focus on the other party. Your buyers and sellers are not experienced negotiators. In fact most have only experienced the often negative negotiations when buying cars. So, they are predisposed to fear and discomfort in a negotiation. Others get caught up in the fight and just want to win no matter the cost or loss. Either way these predispositions make it a lot harder for you. And you can avoid it if you shorten the negotiation.
Rule #2: Don’t let the buyers and sellers come to dislike each other. You take responsibility for what you convey to all parties. The most frequent reason buyers and sellers come to dislike each other is because the Agent talks about one party to the other. So if you hear your client or yourself beginning to disparage the other client intercede and suggest that whatever the reasons for the Client’s behavior might be, let’s focus on putting together the sale and getting the move complete.
Rule #3: Stay focused on the goal of completing the sale. Never let interruptions, the other party’s emotions, emotional outburst, personality, position or anything else distract you from the issues and the concessions that lead to completing the sale. Stay calm. Listen. Empathize. Do not get involved in conversations about the party’s personalities. Do not get emotionally hooked by the emotions of the client. Be a professional. Whether your clients know it or not, they want and need that kind of focused objectivity from you.
Rule #4: People believe what is in writing. So, support your position in writing. If a comparative market analysis supports your position, prepare it. If certain comparables support your position, provide them. If a report supports your position, copy that portion and use it. And most of all put your offer in writing. Don’t negotiate verbally. I realize that it can work many times. I realize that some Agents will insist on it and there is little you can do at those times. Please for your sake and for your Client’s sake make those times rare. Verbal negotiations are fraught with potential problems, misunderstandings, misinterpretations, omissions, as well as simple changing of minds. Put every step of the negotiation in writing.
Rule #5: When you give a concession, ask for something in return. You may not get anything in return but asking dampens the motivation to ask for more. The seller wants another three thousand dollars in price and the buyer says if I accept that I want the kitchen appliances. The seller says ok and so the buyer says we have been thinking about it and we want the washer and dryer too. The seller says ok. So the buyer then asks for….You get the idea. If the seller says no the first time, even if they ultimately end up giving up the kitchen appliances to make the deal, asking for something in return dampens the buyer’s motivation to ask for more. Then at the structural inspection or at the pre-closing inspection the earlier dampening of the buyer’s motivation carries forward and dampens the buyer’s motivation to ask for too much later.
Rule #6: Never take the first offer too quickly or easily. It sends a message that may make your job more difficult later. When you have an offer accepted quickly wait a few hours to call the Buyer. Then don’t emphasize that it was easy. On this same topic, don’t tell the buyer they have bought the house or the seller they have sold the house just because they have an accepted offer…. because they haven’t. The house isn’t sold until there are attorney’s approvals, approved inspections, a mortgage commitment and all other contingencies are removed. Instead of saying congratulations you got it. Say, “Congratulations you are on your way. We want to get the attorney’s blessing, get through the structural inspection and get through the bank process. I don’t expect any problems so I think you have a great home.”
Rule #7: Never gloat. I remember walking into a seller’s house with a full price offer, all cash, and only attorney’s approval as a contingency. It had the closing date the seller wanted, no personal property. I was proud and pleased. This one was going to be easy. So I strutted in with swagger and a smile. I said, “You guys are gonna love this offer.” Well, as you might expect. They questioned me and challenged me about everything from the legitimacy of my buyer to where their cash was coming from, all because I didn’t have the good sense and sensitivity to realize these people are moving their lives. I treated it like a game and they quickly reminded me of its importance to them. The next time I had the situation. I talked about how hard I worked to get them as much of what they wanted as I could. I couldn’t get it all but I hoped we were close enough to come to an agreement. They looked at the great offer and said, “Rich, you did great. We can accept this as it is.” Lesson learned.
Rule #8: When you hit an impasse settle everything else first and return to it. As you present the offer to the seller and you reach an item they don’t accept, make a note to come back to it and get agreement on everything else first. Then, once you are through the offer completely, you will have isolated all the items, if there is more than one that requires negotiation. You will find that at that point the negotiation goes easier. There is nothing else on their mind and they know that this item or these items will complete the transaction. By doing this you create a momentum that carries you to success more easily.
Rule #9: Get the other party to negotiate with themselves. Never negotiate with yourself. This is a more aggressive rule. Above, in Rule # 4 I said to always get your negotiations in writing. This is the exception that proves the rule. Watch. I am sitting with the seller reviewing a Buyer’s Agent’s offer. The seller is willing to accept it and doesn’t want to lose the buyer or the sale. I say to them, “Let’s see what I can do without risking the sale.” I call the other Agent (Agent is another one we capitalize) and ask if the Agent can reach their buyer. They say yes. I tell them that the sellers are in the room and they are really close to accepting the offer. If we could get another $1,500 it’s a done deal. Could they check with the buyers and see if they would move at all? And if they will, I want to get it wrapped up tonight while everyone is in agreement. Ten minutes later the Agent calls to tell me they’ll do it or they’ll do $500 or $1,000 or nothing. A vast majority of the time I’ll get more and make the seller very happy with me. If the Buyers won’t move I call the Buyer’s Agent back in five minutes and to tell them that their offer was accepted as is and compliment them on their smart negotiation. You may or may not approve of this methodology. I am not condoning or condemning it. I am just using it as an example of, “Get the other party to negotiate with themselves. Never negotiate with yourself.
Rule #10: Do not use these rules and approaches carelessly. When these rules are applied or are done awkwardly or carelessly they cause your clients to distrust you. Be careful. Done with care and confidence (and practice) you are going to have a lot more fun, be a lot more productive, preserve more time, and get the admiration and referrals from your clients because you will make them more comfortable in addition to getting them more money with your negotiating skills.
Rich specialize in moving Real Estate Agents and Brokers to their highest levels of production and performance in their business and in their life. Join our FREE Daily Real Estate Training Webinars every week day at www.1stFifteen.com. Contact Rich directly Rich@RichLevin.com or call 585.244.2700 or visit www.RichLevin.com. Rich Levin is President of Rich Levin’s Success Corps inc.