7 Strategies to Improving Your Negotiation Skills
A real estate agent has to wear many hats, depending on how much work you do on your own and how much you do with a team. Whether you’re new to this career or you’ve been doing it for a while, some agents are naturally better at certain aspects of the jobs than others. One of the aspects of being a real estate agent that can be difficult for some, is the ability to negotiate. Although being an agent requires you to be outgoing, a people-person, and well, a smooth talker, negotiating can be nerve-wracking for even the most experienced agents. While we don’t need to tell you how important it is to be able to negotiate well on your client’s behalf, but what we can tell you are some strategies to improve your negotiating skills.
1) Do Your Research
The first step in being a solid negotiator is mastering the 80/20, and in this case, that refers to research. While sellers are usually paying attention to what’s been sold at what price in their neighborhood over the last few months, the overall value of their home, etc., buyers are looking at totally different factors, which oftentimes are contradictory. Going into your negotiation with clear numbers and facts will end up doing the most of the work for you.
2) Set Expectations for Yourself and the Client
Though you’re the one doing the negotiating, your clients are waiting and are likely having a lot of anxiety while they wait for a response. And, in markets where there are constant bidding wars, the pressure is on. And, in some cases, it’s not just the worry of whether or not the seller will accept the offer, but if you can get your clients to put out a strong offer to begin with. If your clients are flexible and have a range they are willing to work with, this can set you up for a better negotiation altogether. Just be sure that you and your clients have established these specific expectations before going forward. It may help that they are clear about what the house may actually sell for, based on what’s been happening recently in your market.
3) Provide an Escalation Clause
Speaking of a bidding war, negotiating can be super stressful because you want your clients to get the house, but you also don’t want them to overpay. How can you give the most attractive price-point to the seller, without throwing your clients under the bus? Well, setting expectations is the first step in making sure it’s a win-win situation for everyone. But, using an escalation clause can help.
An escalation clause is when you write an offer that tells the seller you are willing to go over their highest written offer by a certain amount, but that your clients are not willing to spend more than a given amount either. This gives you some leverage but also protects your clients from unintentionally spending too much.
4) Ask Questions and Provide Feedback
Though there are certainly cases in which sellers want to get the property of their hands as quickly (and at the best price) they possibly can, there’s still a human aspect to the whole process. Many sellers do want to know who is interested in buying their home, because this may give them the nudge they need to accept the offer. So, get to know the seller, their agent, the reasons they are selling, etc. If you’ve taken the time to get to know your client (as you should), you can use this to essentially help create a match. At the end of the day, sellers want to get the highest offer they can get, but they may be willing to accept the offer of the pregnant couple buying their first home rather than the investor who has the cash to get whatever.
5) Offer Something Loose
An escalation clause is one thing, but offering something loose could go a long way, too. Some sellers are confident that they can get way more for their home than you know they’ll get for the home. So, you offer them a price slightly above what you and your buyers know the home is worth, and two months to keep finding another buyer. If they do find a buyer that will give them the price they want, they’ll have to pay you a fee. If not, they’ll have to accept your offer.
7) Be Confident and Stick to Your Guns
As you can see, you don’t have to have been the head of your college’s debate team in order to succeed at negotiating. As long as you are prepared, you’ve done your research, and you’ve set expectations with your buyer, the rest is just using what you should naturally be good at – speaking to others! Just be confident and stick to your guns. Don’t say any more than needs to be said, and if they offer a response that you were not expecting, tell them that you will get back to them after discussing it with your buyers. Don’t put emotion in it (unless it will help!) and don’t let them take over the conversation. At the end of the day, you don’t have much to lose, whereas unless there’s a ton of demand for their home, they have way more to lose.
7) Practice the Art of Persuasion
Of course, negotiating is not all peaches and cream. Sometimes, you will need to use a little persuasion to get the seller to accept your offer, and that can take time to learn, practice, and implement. There are a lot of books and blogs you can read that offer skills on persuasion, and you can use these how you see fit. There will also be cases in which you won’t just be negotiating the money, but also other things that need to be done with the home (if you have the leverage to do so). There’s nothing wrong with taking some time to practice what you want to say before picking up the phone or putting your offer together (which, writing it will always be the easiest way, yet no less nerve wracking).
You got this!