8 ways to be an Amazing Negotiator
July 11, 2018
You have to be armed with a pretty diverse skills set in order to be successful as a real estate agent. Not only must you be highly knowledgeable about your local market and its current trends, but you also need to be able to effectively communicate the buying and selling process to your clients.
These skills, however, are just the beginning. When selling a home, you need to be an expert marketer, able to make your listing stand out from the competition. When working with buyers, you need to be quick to react to hot new listings. And no matter which side of the deal you’re on, you need to be an amazing negotiator.
The Importance of Strong Negotiation Skills
Nearly everyone negotiates in one capacity or another during the course of their regular, everyday lives. Whether it’s negotiating with your significant other over where to go for dinner, or allowing your kids some extra time on computer for completing their homework first, you negotiate all of the time – probably without even realizing it.
But when it comes to the being an effective real estate negotiator, these casual interactions aren’t enough experience to get you by.
According to successful broker and popular blogger Sean Carpenter, “Negotiating isn’t easy to learn. The North American culture doesn’t exactly support the idea compared to many of the other world cultures. Yet in an industry like real estate, the ability to negotiate is an important skill and one that many Buyers and Sellers count on and expect from their agents.”
According to research from the National Association of Realtors, 12% of all buyers consider negotiation skills at the top of the list of services they’re looking for from a real estate agent. If you don’t have the skills to properly negotiate on behalf of your clients, you’re not providing them with the level of service that they deserve. Over time, this can damage your reputation and make it difficult to grow your business.
Negotiate on More than Just the Price
Too frequently, buyers, sellers, and real estate professionals alike all get so caught up on negotiating a property’s sale price that they forget that there are plenty of other terms that they can negotiate on. According to the time-tested real estate adage, everything is negotiable.
While a good deal ultimately boils down to dollars and cents, it’s not the only thing you should be focusing on. Some other sections of a contract that you can negotiate include:
- Money Deposit – Most areas have set standards for how much an money deposit should be. Contracts with a larger-than-normal money deposit provide extra security for the seller and show a greater level of commitment from the buyer.
- Major Milestones – There are a number of different major milestones throughout the buying and selling process. From the length of the inspection period to the date that the buyer must have firm financing in place, these milestones give both buyers and sellers room to negotiate.
- Which Items Convey – In most cases, fixtures – items that are permanently attached to a home – convey from one owner to the next. This includes things like ceiling fans, custom blinds, and hard-wired security systems. Other personal property, things such as kitchen and laundry appliances, is generally not included, but can be a great negotiation point from either end of the deal.
- Seller Concessions – In certain situations, seller concessions are a great way to negotiate agreeable terms without reducing the total purchase price. This is especially true when buyers are looking for creative ways to cover closing or renovation costs because it gives them cash back at the closing table without shortchanging the seller.
- Closing Date – With real estate, time is of the essence. Most sellers, whether they’re owner-occupants or investors, want to close as quickly as possible. In a sellers’ market, offering a close closing date is a great trick to give buyers a leg up on the other offers.
Strategies for Becoming an Amazing Negotiator
Improving your negotiation skills takes more than just knowing which areas of a contract you can bargain with. It also requires that you implement a variety of different strategies and techniques that will aid during the negotiation process.
1. Understand the Market
When negotiating a real estate deal, few factors will have more of an impact on your strategy than the current market conditions. In a seller’s market, the optimal negotiating techniques may be vastly different than the ones you’d want to use in a buyer’s market. For example, in a seller’s market, homeowners can be much more aggressive with their counteroffers than when buyers have plenty of other options to choose from.
2. Research the Other Party
Perhaps the second (or maybe even the first) most important way to improve negotiations is to do your research on the other party. Do they need to buy or sell right away? Have they been looking or had their home on the market for a while? How much can they afford to pay or how much do they need to net from their home’s sale?
No matter whether you’re representing the buyer or the seller, knowing the other party’s motivation can give you the leverage you need to negotiate the best deal possible.
3. Always Make a Counteroffer
One common mistake that sellers make – and their agents let them – is to simple ignore or decline offers from buyers that aren’t quite what they’re looking for. Anytime that an offer comes in for one of your listings, even if you know your sellers won’t accept it, encourage them to make a counteroffer that’s more in line with their goals. At worst, you and your sellers have wasted a few minutes of time. But if you’re lucky, you may wind up pleasantly with an accepted contract.
4. Position Your Clients for Success
When you’re working with buyers – especially in a competitive seller’s market – you need to be positioning them for success from the very beginning. This can include things like making sure they’ve been pre-approved for a loan, relaying new listings to them immediately, and even including a photograph and hand-written letter from them with each of their offers. The stronger your client’s position, the more likely you are to come out ahead in negotiations.
5. Use Factual Evidence to Support Your Side
When trying to negotiate the specifics of a real estate deal, make sure that you’re using solid factual evidence to support your side. For example, if you’re representing a buyer that’s trying to get a seller to offer a credit for repairs, don’t just putting down arbitrary an arbitrary estimate of cost. Instead, include an actual quote from an experienced contractor or local vendor.
6. Don’t Draw Things Out
While you should always be trying to negotiate the best deal for your clients, you need to make sure that you’re doing so as quickly as possible. Avoid negotiating separate points individually – a practice which requires a lot of back-and-forth communication. For sellers, spending too much time negotiating means pushing closing back further and further. With buyers, drawing out the negotiating process gives other interested parties a chance to swoop in and snatch up the opportunity.
7. Don’t Make It Personal
For real estate agents who are truly passionate about what they do, it’s easy to let negotiations become personal. You want to deliver the best results to your clients, and you’re set on doing whatever it takes to make that happen. But sometimes, being so personally vested in winning can let emotions make their way to the bargaining table – so much so that your clients miss out on the perfect opportunity over basically insignificant details.
8. Be Honest with Your Clients
Negotiation isn’t about getting everything you want. When you’re negotiating, you’re trying to bridge the gap between two separate parties and allow everyone to walk away feeling satisfied with their end of the deal. If you’re building up unrealistic expectations by encouraging your clients to stand firm and be unwilling to budge, you’re not actually negotiating at all – you’re making demands.
Improve Your Negotiation Skills and Upgrade Your Business
By working to improve your negotiation techniques, you’re not just preparing yourself to better serve your clients – you’re also equipping yourself with the skills you’ll need to expand and grow your real estate business.
In today’s digitally connected world, word of mouth spreads faster than ever, whether through popular social media platforms or via Agent review sites. As a real estate professional, this uninhibited sharing of information is great news when you’re keeping your buyers and sellers happy, but potentially damaging if your negotiation skills aren’t up to par.
Learning how to be an amazing negotiator is not a one-time process. Instead, it’s a skill that you should always be working on and looking for new ways to enhance your effectiveness and technique. By staying committed to improving your negotiation skills, you’re also committing to improving your personal brand, reputation, and future.
