Homebuyers and sellers hire you for your market knowledge, expertise, and, most importantly, experience at the negotiating table. That’s why, “Am I getting the best deal for my client?” is the question every agent should ask themselves as the home buying or selling process gets underway.
Use these negotiation strategies to strengthen your skills and ensure your clients are satisfied.
Listen
Good negotiators search for common ground to bring two parties together. There’s no such thing as a win-win, but you can get to a deal compromise that satisfies all parties. Ask probing, open-ended questions that deploy the 90/10 rule: listen 90% of the time and talk 10%.
Work with the other agent to find out what’s important to the other party — beyond why they may be buying or selling. Do they need a fast close? Do they have contingencies? Are they selling an investment property taking advantage of 1031 exchange or a long-time family home? Are they new to the area, or familiar with the community? Finding out the “story” behind the transaction provides you with empathy (and leverage) to craft the best transaction for all involved.
Finally, keep your ego in check at the negotiating table and listen carefully before reacting to any statements. Tempers can easily flare during a negotiation, especially if one party feels unheard. Let people make their case completely before responding with a counter offer or moving the conversation forward.
Negotiate in person if possible
Face-to-face negotiations allow you to better observe body language and tone of voice and leaves less opportunity to misinterpret someone’s intended meaning the way written communication via email or text can.
A virtual meeting or phone conversation is a next-best option when busy schedules or long-distance transactions don’t allow for in-person contact. Remember that negotiations don’t need to be completed in a single meeting; it may take more than one meeting to work out the details. Save the written communication as a final step once you’ve worked out the details.
Do more research than the other side
Do your research and let the data drive your negotiations, as it’s usually the side with the most information that wins the day. Agents who leave money on the table usually haven’t done their homework, so be prepared. The more knowledge you have, the more you can leverage.
Facts and data are hard to dispute: Whether buying or selling, gather as much information as you can about the property, including:
- Average market time for similar homes
- Taxes
- Comparables
- Square footage and room counts
- Homeowner’s association fees
Gather insight about the other real estate agent to learn their negotiating style, what they most often compromise on, and the sales-closing tactics they typically use. You can also research an agent’s previous deals to compare the selling price with the initial listing price for more insight into what kind of negotiation you can expect.
Know your client’s options
Always have a back-up plan if negotiations stall or fail. Having the flexibility of options gives you an advantage when the other side is aware you’re willing and able to walk away from a deal if necessary.
In order to have a plan B, you need to know what your client is willing to compromise on and what’s off the table, as well as the motivating factors of the opposing party. Know your client’s maximum purchase price, or minimum selling price, in addition to which points are non-negotiable and where there’s room for bargaining.
Using the BATNA (Best Alternative To a Negotiated Agreement) method provides negotiating power and clarifies your client’s parameters for what they will (or won’t) accept.
Don’t lose your power to say “no” by putting all your cards on the table at once, but also remember that saying “no” doesn’t mean the deal is dead and your client is walking away; it merely means you’re offering a decision on a specific point in the negotiation. You can say no and keep the conversation going with a counteroffer or other trade-off.
Learn to discern the fine line between continuing negotiations in good faith and when it truly is time to walk away. Focusing too heavily on forcing a positive outcome if it’s clear that the transaction is not a good fit for either party only delays the inevitable.
If you’ve invested considerable time at the negotiating table and a deal doesn’t seem to be on the horizon, it might be in everyone’s best interest to halt the process and move on.
Control your emotions
Unless your client is a seasoned real estate investor who buys or sells property frequently, real estate transactions can be an emotional process for both buyers and sellers.
It’s fine for your client to express their feelings, but it’s important to keep a clear-headed perspective and stay focused on the outcome because you’re acting on their behalf. Don’t take someone else’s behavior or comments personally, and don’t allow them to throw you off.
Stay positive, polite and professional, and chances are, your client will be happy with the deal you negotiated for them and happy to pay you your commission — whether it’s for a million dollar home or $100,000 condo.
