|
Why do you need to become a Power Negotiator? With the increasing acceptance of the "Buyer Broker" relationship, the reason that a buyer selects a real estate agent is changing. Buyers are looking for the agent who is a good negotiator. Because of the growth of the internet, buyers and sellers have more 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. As a real estate salesperson, you use exactly the same techniques that international negotiators use to reach agreement on world problems. Learning to improve your negotiating skills is the highest and 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 that you can when you’re negotiating! Negotiating isn’t just for getting hostages released and resolving world crises—you’re negotiating 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 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 the Israelis refusing 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 you’re not saying 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 in 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 generate these two thoughts:
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 in that low. By saying Yes too quickly you triggered the same two thoughts:
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 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.
Nibbling You can get things later in the negotiations that you can’t get earlier. You may be negotiating the length of a listing. You ask for six months, but the seller will only give you three months. Get them to sign the listing, but before you leave say, "Could we take another look at the length of the listing? I really can get my broker to commit more advertising dollars to a longer listing." And you have a good chance of them saying, "Well all right, if you think it’s that important, sure, let’s go ahead." Always go back at the end and make a second effort on something that you couldn’t get them to go along with earlier. However, look out for people Nibbling on you, because there’s a point in the negotiations when you’re very vulnerable, and that point is when you think the negotiations are all over. You may have successfully negotiated a listing at a very salable price and you’re feeling good. At the very last minute the seller says, "By the way, if we sell it ourselves we don’t have to pay you a commission, do we?" You’re at your most vulnerable point in the negotiation, for two reasons. First, you’re feeling good because you’ve just negotiated a good listing. When you feel good you tend to give things away that you otherwise wouldn’t. Secondly, you’re thinking, "Oh no, I thought we’d resolved everything. I don’t want to have to go back to the start of this thing, renegotiate it, and stand a chance of losing them. Maybe I’m better off just to give in on this point." Look out for people Nibbling on you! The counter gambit to the Nibble, when they do it to you, is gently to make the other person feel cheap! With a big grin in your voice, you say, "Oh come on! We worked out a super marketing program here. Don’t ask us to exclude any buyers, fair enough?"
Flinching It’s critical that you react visually whenever the other side makes a proposal. Assume that they don’t think you’re going to agree to their suggestion. That they’re only throwing it out on the negotiating table to see what your reaction will be. When the seller asks you to take a 90-day listing, they may not think for a moment that you’ll go along with that. It’s just something they threw out on the negotiating table to see what your reaction would be. And if you don’t appear to be too shocked or surprised, suddenly they’re thinking, "Well, that didn’t seem to shock them too much, maybe we will get them to do that. Let’s hang in, and be tough negotiators." When a buyer asks you to take in an offer at way below the listed price, they may not think for a moment that a top professional like you will do that. It’s just something they’re throwing out to see what your reaction will be. If you’re not too shocked, they immediately start thinking they have a chance of getting the property at a bargain price. So, prepare to Flinch at the other side’s proposal. Slap your cheek, gasp, and say, "You want us to do what???" And you don’t have to be negotiating in person to make this work—Phone Flinches can be very effective too! It’s fascinating to watch a negotiation when you know what both sides are thinking. When I do two-day seminars, I break the audience into teams and we actually do some negotiating together. I’ll watch one side make a proposal to the other side, which they think is absolutely outrageous. They think they’re going to be laughed out of the room the minute they present it. But to their surprise, the other side doesn’t seem too shocked. Suddenly the negotiation changes. What a moment ago was an outrageous proposal to these people, now becomes doable. Now they’re thinking, "Well, maybe we do stand a chance of getting this. Let’s hang in, be tough negotiators, and see what happens."
Trading Off Whenever the other side asks you for a small concession, get in the habit of asking for something in return. Let’s say that you’re the listing agent and the sale is due to close in a week. The selling agent calls you up to explain that the buyers are having trouble getting their funds together. Could the closing be delayed by a week. You know that this isn’t going to be a problem with the sellers. You have a tendency to say, "Sure we can do that. No problem." Don’t do that! Always ask for something in return. Say, "Well I don’t know. I’ll check with my sellers and see, but let me ask you this: if we can do that for you, what can you do for me." Three things might happen:
Later you’re going through the final walk through and the buyers have found a light switch that doesn’t work. It is threatening to delay the entire closing. Now you can say, "Do you realize how hard I had to talk to get the sellers to go along with that extension when you needed it? They did that for you, so let’s just overlook this little problem, fair enough?"
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 they 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. So you say, "Look we can’t get the sellers to budge on the price, but go along with that, and I’ll get them to leave the patio furniture behind." Perhaps the sellers were planning to do that anyway, because it would cost more to ship it to their new home than it’s worth. However, now you’ve been courteous enough to position them to feel good about giving in to you. Now the buyer can say, "Well, all right, if they’ll do that for me, I’ll go along with the price." And they don’t feel they lost, they feel they traded something off. Learn to improve your negotiating skills is the highest and best use of your time. You can’t make money faster than you can when you’re negotiating well. When you’re negotiating a sale with a buyer, you could be making thousands of dollars per minute!
One Minute Negotiating Primer:
|
