Every agent needs strong negotiation skills to get their deals to the closing table. The definition of negotiation is bringing two or more parties together to reach an acceptable outcome for all. In previous articles of this negotiation series like, “7 steps to a successful negotiation,” and “How knowing your sellers can improve your negotiation skills,” we addressed the must-have information to successfully negotiate.
Below are 13 additional reminders to negotiate competitive contracts and get your deals to the closing table.
Always advocate for your client.
Remember your agency agreement and your fiduciary duty. 30% of the real estate exam is based on ethics. The questions on the test were all situational, testing on whose side you’d be on in negotiations or tough situations. Your job is to be a skillful advocate, so in a negotiation, take the side of your client always and keep yourself out of trouble.
Never reject an offer.
If you are the listing agent and your property receives an offer, never reject the first offer always counteroffer. Even if it seems lowball or outrageous, encourage your sellers to have a negotiation. Sometimes a buyer will come in low just to get the ball rolling. You and your sellers can always counter at the list price to show your serious about price but willing to negotiate on other items. If you can help it, never let a deal die on your watch.
Recognize that price isn’t the most important item for many clients.
A client who gets their closing and possession dates — or any other perk — may be more flexible on price than first suggested. A buyer who finds their dream home may justify paying a little over the list price to get it. A seller who gets a lease-back option may take a lower price. See previous articles in this series on buyers and sellers for more insights here.
Emotions and Logic.
Facts like comparable sales, buyer or seller net sheets, days on the market and list-to-sell price ratios are all important, but you can’t forget emotions. You must find the balance between facts and emotions to have the strongest negotiation possible. Think of cleaning before 10 more showings. What will it feel like to be moved into a new home before the holidays? If the sellers accepted this offer, they could be closed by the end of next month. All of these seemingly small details are important to both buyers and sellers during the long process of buying or selling a home.
Practice professional courtesy.
Don’t be overly aggressive, abusive or manipulative. Unfortunately, you’ll meet an agent like that again on the other side of a different deal. The seller might expire if the property doesn’t get sold. The buyer might take themselves out of the market and come back in 6 months. Practice reputation management by being ‘the rock’ in the transaction, not the drama king or queen. Your clients will always be stressed when negotiating, take the stress away by having superior negotiation skills.
Know if and when your client is willing to walk away.
Sometimes there are deals you need to walk away from. Ask your buyers or sellers how they would feel if you call them tomorrow morning to let them know the other offer was accepted. Are they elated? Stressed? These answers will give you insights into how far to push the deal.
Realize that what a client says is a deal killer may not actually be a deal killer.
You don’t really know what a deal killer will be until there’s a legitimate offer on the table with real numbers to consider. Until you have all the information from your buyers or sellers, never advise them to reject an offer. The client’s circumstances, motivation or time frame may have changed in the time the house was listed or in the time they were looking for a home. Make no assumptions without facts.
Be realistic based on market conditions.
If your listing has been on the market for a month, showings are slowing down and it still doesn’t have an offer, then you should take your only offer more seriously. Conversely, if your buyer hasn’t seen a single home that even meets their criteria except for this one particular home, then they need to offer something acceptable if they expect to actually buy the home.
Consider the possibility of a secondary negotiation with the inspection.
The accepted price can affect the inspection scenario positively or negatively. The seller could reduce from the list price in exchange for no inspection remedies. Or, the buyer could pay 5% more if they expect the seller to fix some inspection red flags.
Don’t text your negotiations.
Any texts you send will almost always be misconstrued, and texts are not legally part of any contract. Just don’t do it.
Don’t speculate or make up stories about the buyer, seller, agent or house.
Operate from facts, not fiction. It’s easy to make assumptions in the heat of battle but they are rarely correct. No matter which side of the transaction you represent, it is best to leave assumptions behind even when things aren’t going your way.
Look for a solution, not for a fight.
It is easy to start a fight in a negotiation like this. To avoid a heated exchange, use scripts like ‘help me understand where your client is coming from,’ or ‘what would happen if we did this.’ Be a problem solver, not a problem maker. If you keep a deck of these phrases handy, you’ll be the one to keep a deal on track and friendly. Remember the goal is to close on the deal.
Consider using video to get your point across in a non-confrontational way.
Sometimes the other agent, buyer or seller will demonize the other party out of frustration or lack of information. Humanize your side of the negotiation to settle frayed nerves and clarify your intentions. Make a personalized video that the other agent can use to get the deal done.
Use all of these strategies in your next negotiation, and don’t miss any of the other articles in this series highlighting the must-have skills for any agent.
Tim and Julie Harris host the nation’s #1 podcast for real estate professionals. https:// timandjulieharris.com/category/podcast has new podcasts every day. Tim and Julie have been real estate coaches for more than two decades, coaching the top agents in the country through different types of markets. https://PremierCoaching.com to get started for FREE today.