“A good agent, with knowledge of the market and negotiation experience, can make the difference between a successful purchase and a deal that falls apart.” (USNews.com)
Not everybody is comfortable or confident negotiating, but if you want to make money or make sure returns on a real estate investment, or want to make sure that you get the best possible deal for a client, then you will need to master the art of real estate negotiation.
Don’t simply consider price because, while cost and budget are obviously important to all parties, other factors may be important to both buyer and seller.
- Property condition
- Required concessions
These are among some of the most important. Different deals may need different negotiating tactics, according to whether you’re dealing with an experienced or novice negotiator and also depending on the specifics of the deal itself.
Agent Negotiation Tips
1 – Keep Quiet
Benefit from the power of silence.
Whether the other party makes you an offer, try saying absolutely nothing. It will probably make you feel uncomfortable, but it will also make the other party feel uncomfortable. They will start to wonder whether they’ve upset or annoyed you and, after some time, they are likely to make you a revised offer.
Without saying a single word, you could see the initial offer increased, or decreased, according to which side of the negotiation you are on.
2 – Speak Second
Letting the other party make the first move is a strong negotiating tactic.
First of all it enables you to determine the natural middle ground for negotiations. Novice negotiators will usually end up settling around the midpoint of negotiations so if you offer $100,000 and the other party counters with $120,000 then the most likely final price would be $110,000 if you are both inexperienced
By letting the other party make the first offer, you have much greater control over where price negotiations are going to go. If you receive an offer of $120,000 from the other party, then you could counter at $90,000 which would reduce the midpoint to $105,000.
Allowing the other party to make the first offer also allows you to employ tip 1 of keeping quiet to see if you can get the initial offer reduced without having to do anything, and it allows you to collect potentially invaluable information from the discussion.
3 – Earn The Deal
One of the most frustrating feelings is securing a price straight away, with little or no negotiation required.
You will almost certainly feel like you could have a better deal, and there’s a good chance that the other party will feel the same too. This carries the risk that the other party will want to back out of the deal because they feel like they could have done better.
For a negotiation to truly take place, you need friction and you need it on both sides.
Make the other party feel like they’ve had to thrash out a deal and, as long as they feel that the final deal was beneficial to you both, then this will reduce the likelihood of them wanting to back out of the deal once it has been agreed upon.
4 – Flatter And Complement
Don’t be afraid to flatter and compliment the other party.
As long as the compliments you pay are believable and related to the negotiation then it can lower defences and help make sure the best chance of a good deal that benefits you both.
Also, if you play hardball, act hard, and don’t come across in a positive way, then it greatly increases the likelihood that the other party will want to get one over on you. They won’t be looking for a mutually beneficial deal, but will instead be looking for some way to claim a victory over you.
Don’t become an opponent.
5 – Greet Concession Requests With Hidden Penalties
There is a good chance you have been on the receiving end of hidden penalties during negotiations in the past. They are used as a way to try to prevent parties from asking for additional concessions to a deal.
Imagine that you ask for $1,000 off the price of a property but are really keen to close the deal and get your hands on the house. If the seller makes you anxiously wait a day or two, or they apply some other hidden penalty, you will be less inclined to ask for any further concessions for fear of the deal getting away from you.
The other party shouldn’t recognise that a penalty really is a penalty.
6 – Deliver On Promises You Make
If you make promises, keep to them.
Whether you’ve arranged to make a call or attend a meeting, make sure that you turn up where and when you agreed. If you turn up late or fail to turn up, then you will instantly be on the back foot with any negotiations or discussion that takes place in future.
The other party will also be on the front foot, and there is at least a chance that they will walk away from the deal if they view you as being too high of a risk.
7 – Knowledge Really Is Power
Throughout the negotiation stages, every bit of knowledge and information you can gather will prove useful.
For example, the initial bid or initial offer from the other party should give some indication as to what they believe important. While price will usually be one of the most important factors, it may not be the only important facet.
If they stipulate completion dates or time, then it is reasonable indication that this is an important element to the other party.
Ask questions, listen to the answers, and use the information you gather because it could enable you to negotiate a lower price or receive some concession that is important to you or your client while ensuring a mutually beneficial deal.
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The Real Estate School offers licensing and training in real estate. Become your own boss, enjoy considerable earning potential, and master the art of negotiation and other essential real estate skills.