Why do you suppose clients utilize your services to negotiate on their behalf? Because most people aren’t very good negotiators. So if they are not, you better be. Here’s how to play the game and win. And just because you win, it doesn’t mean someone else has to lose. The best deal is one that’s fair to all concerned. Here are your five keys:
- Be prepared
- Know the territory
- “The devil is in the details”
- Have a plan
- Don’t take it personally
Key #1: Be prepared. The Boy Scouts are onto something. You may not need to start a fire by rubbing two sticks together, but you’ll have a successful negotiation if you do your homework. This means knowing all there is to know about the people you’re negotiating with. Not just the other Realtor, but also the other Realtor’s clients. What motivates them? What are their weak points? Where are they likely to resist a push-back? When it comes to the Realtor, you may already know him or her. If you don’t, you should make your own evaluation based on your interactions. Then follow up with inquiries to colleagues. What kinds of deals has he been making? How many recent closings has she had? (Is she hungry, in other words?)
Key #2: Know the territory. Pay attention to what the market is saying. Is it a buyer’s market or a seller’s? Within that general framework, there are always pockets of difference, neighborhoods that are “hot,” or even single streets where homeowners are upgrading their properties. Pay attention to credible rumors about new developments, infrastructure improvements, and other amenities that make a difference. All properties have their pluses and minuses, so it might be possible to go against the tide, IF you have the information you need. For instance, if your buyer will consider a property in a desirable neighborhood with lackluster sales, that gives you some leverage. Or, if your buyer has all cash and can close quickly, that would motivate a seller who just got transferred across the country.
Key #3: “The devil is in the details.” Again, you need to evaluate how motivated each seller might be. Know what’s going on behind the scenes. For example, let’s say you’ve shown your buyer two similar properties with the same asking price of $200,000. You plan to write a number of concessions into your offer—new paint and carpet, new appliances, and the seller pays half the closing costs. One seller isn’t really that motivated—he’s willing to sit still for six months or more until he gets the price he wants. But the other sellers have personal issues, such as a job transfer, a divorce, or a growing family. They are willing to make concessions, so that the $200,000 selling price is actually discounted down to $190,000 or lower. It’s easy to see which way you should advise your client to move.
Key #4: Have a plan. Before making the initial offer, you need to devise a plan and discuss it with your clients. Decide exactly what you want to get out of the negotiation. If the seller responds with a counter-offer, you should know exactly what your client will and won’t accept. If the seller suggests terms you absolutely cannot agree to, then you and your client should be prepared to walk away. (See #5 below) Buyers and sellers are emotional about their homes. To the seller, you’re not only eating away at his profits, you’re taking away his memories. To the buyer, this may be their dream home and they will do ANYTHING to get it—and they shouldn’t. You have to be the clear-eyed thinker, the grownup in the room at all times.
Key #5: Don’t take it personally. It’s not about you. It’s not even about your clients. It’s always a mistake to take a negotiation personally. If you are operating from your emotions, you are going to appear weak. Keep the personal issues and personalities out of the conversation.
Finally, if the negotiation gets stuck and neither side is willing to budge, the final best negotiation tactic is to pick up your files and walk away. Be matter-of-fact, not angry. You are always stronger if you end the negotiations first. Often when the other person sees that you’re willing to give it up, they will think it over and come back to the table later. Then you will definitely have the upper hand because they already know you are willing to walk away.
No matter who’s sitting on the other side of the table, always think of yourself as a winner, a master negotiator, and behave accordingly. Not with arrogance or egotism, but with confidence because you have prepared both yourself and your client to make the best deal possible.