NEGOTIATION… About What and with Whom?
After all the courses and the books about this topic, the most complete working definition of ‘negotiation” is simply to have a discussion between two or more parties aimed at reaching an agreement.
But wait a minute … doesn’t that sound a lot like salesmanship? Which is often defined as the level of skill you have in convincing people to buy or in persuading people to do something.
No doubt you realize that the only thing you will be paid for as a real estate agent is your ability to positively persuade others?
But let’s be totally frank. There is no amount of super salesmanship skills or negotiation prowess that will persuade a seller to sell their home at a price they do not want to accept.
Nor can you persuade a buyer to pay more than they can afford.
WHAT Are The Core Elements That Can Positively Impact Negotiation?
- BE ASSERTIVE BUT NOT ADVERSARIAL- Assertiveness – being bold, confident, direct and self-assured – is a quality trait in a negotiator because it communicates to your buyer/seller and other Realtors® a strongly held positive belief in your commitment for mutual success.
- BE EMPATHETIC BUT NOT A PUSHOVER- Keep in mind, of course, this doesn’t mean you always agree with them – just that you understand them and act accordingly.
- BE TRUSTWORTHY- When you give your word – follow through on it.
WHAT Is Being Negotiated In A Real Estate Transaction?
Let’s really do some deep serious thinking about this. Seriously?
The seller listed their home for $X and the buyer makes an offer for $X – Y
We can mention other less demanding items such as the closing date, home fixtures and so on.
However, in the end, negotiation is all about the difference in the money. Nothing else.
WHO Is Doing the Negotiation?
Using the protocol that has evolved over time the standard practice today is that all direct discussion about an offer takes place between the seller’s agent and the buyer’s agent.
Almost never does the buyer’s agent meet the seller. In fact, many times the offer is handled electronically.
So … who is doing the negotiation?
The listing agent presents your offer to the seller which makes your offer vulnerable to the skills and/or motivation of the listing agent.
Both agents are nothing more than surrogates working on behalf their clients.
There are two competing issues at this moment of the transaction that were established previously.
- The listing agent promised to get the seller “the highest price possible in the shortest period of time with the least amount of inconvenience.”
- On the other hand, the buyer’s agent, often working without the security of a Buyer Agency Agreement, has similarly promised the buyer to act vigilantly presenting their underpriced offer and then potentially negotiating a sign back offer priced within their previously stated parameters.
Crazy as it sounds but that is it. That is what it is all about. Nothing more and nothing less.
But you already knew that. So why do we feel the need to sophisticate our business and call this negotiation. There is not negotiation. It is salesmanship.
Even though the listing agent is compelled to present the offer if the price is not right it is going nowhere. This blind “negotiation” is exacerbated in a multiple offer marketplace. What can be done, if anything, to maximize your potential for success?
IS Negotiation Involved In A Listing Presentation Or Is It Salesmanship?
The listing price is the critical element in the presentation but YOU are the one they will choose.
You have a relatively short period of time to penetrate their skepticism. They are fully expecting you to do what all agents do but are looking for someone who has their best interests in mind.
Agents are very diligent, and should be, about thoroughly assessing what the market says a home is worth. But let’s be frank … pricing a home, even using a detailed CMA, is NOT a science it is an art form.
As professional real estate agents, sometimes we miss the human elements of both the seller and the potential buyer. Sellers are no longer ignorant about home prices. They are reasonably well informed. And they certainly have their opinion of price in mind.
That price is directly related to their future dreams. Buyers, who are on the other side of the price equation, are likewise tied into their dreams. But all dreams are tied to the money.
In the listing/marketing presentation we are so conditioned to show our personal and corporate “greatness” first while warning the seller of the “dangers” of overpricing and dragging things out to the grand finale of the price.
As we attempt to impress them by hyper selling our great stuff with Spielberg-style graphics, etc. while the seller has ONLY one or two things on their mind: What’s the PRICE and what’s your commission? We literally wasted our good stuff on frozen minds.
Our training for the Listing Presentation has historically conditioned us to do everything possible to warn the seller, ahead of giving them the price, to NOT overprice their home.
In fact, if we were honest, it is the ONLY thing that we sell aggressively besides telling them that you will get them the highest price in the shortest period of time.
Think about your own presentation and the many different ways you attempt to make that point.
Isn’t it time to become truly Seller Centric? For example, what could possibility be wrong with telling the seller upfront that you want to list their home at the highest range of value as shown in the CMA?
Then explain in creative detail how you intend to find the buyer wanting to live in their neighborhood. You will also discuss the caveat of revisiting the price later if necessary.
That is seller-centric. It’s about the price.
IS Negotiation Involved In A Buyer Agency Agreement Or Is It Salesmanship?
When you are meeting buyers for the first time consider these thoughts.
Greet them as you would and spend some time qualifying them as capable for purchasing a home. You have, most likely, already scheduled several homes to view.
When you get in the car speak to them in a casual but upbeat tone … “We are going to do 3 things today.
- Number One we are going to have fun exploring some homes together
- Number Two we are going to uncover exactly what you want in your new home and JUST IMAGINE … maybe one of these could be the one.
- And Number Three (PAUSE) … well we will discuss number 3 later … OK?”
Take the tour of scheduled homes … stay casual … have a notepad with you at all times taking notes of their thoughts while in each house. When the tour is over and you have developed more rapport and they hopefully they LIKE YOU … then say the following:
Your script (modify to sound like you)
“May I share a thought with you? This is the Number Three I mentioned earlier. You seem like you are seriously looking for a home. I want to give a suggestion to you that will really be of great benefit to you. We have just met so I am not necessarily expecting you to do this with me … well I really am 😊😊
“You should really find an agent whom you feel is competent and one that you are confident will be pleasant to work with and then link up with him or her and sign a Buyer Agency Agreement.
“I sincerely tell you that it is in your very best interests for so many reasons. Your agent will diligently search daily and oftentimes will become aware of homes before the listing is even posted on MLS.
“In fact I am honestly convinced that THE MORE YOU consider and understand what this will mean for you THE MORE YOU will see the wisdom in doing so.
“JUST IMAGINE the peace you will have not being glued to Realtor.com and other sites fearing you will miss out on your home … JUST IMAGINE simply calling your agent or waiting for their daily call.
And then JUST IMAGINE the day you get the phone call telling you that your dream home is about to hit the market so you get to go to the head of the line.”
Can You Prepare for Negotiation?
Perhaps not really prepare but there are the usual elements to every offer. However, in the long-term view of your career you will be well served by building positive business relationships with as many fellow agents as possible.
For example, every time you work with another agent on a successful transaction be grateful and express your appreciation in a tangible way. This sounds like common sense but so few do it. There is an atmosphere of adversarial competition.
But remember … you will always be dependent on the selling agent presenting your offer.
Does It Matter?
So, is it Negotiation or Salesmanship? In the end, it really doesn’t matter. A rose is a rose no matter what you call it. But there some simple principles to follow to maximize your success:
- BE ASSERTIVE BUT NOT ADVERSARIAL
- BE EMPATHETIC BUT NOT A PUSHOVER
- BE TRUSTWORTHY
- BUILD POSITIVE RELATIONSHIPS WITH YOUR FELLOW AGENTS
- BECOME MORE SELLER CENTRIC IN YOUR LISTING PRESENTATION
- BECOME MORE CONFIDENT IN SEEKING A BUYER AGENCY AGREEMENT
6 thoughts on “Negotiations from the Heart…How to Positively Influence Your Transactions”
I agree that this is true often when you are selling someone’s home. Investor sales are usually different as ROI is almost always the key. I have had a seller turn down a significantly higher offer from a stronger buyer because he liked the idea of a younger family enjoying the home he loved. It is always about the client and not our interest as an agent!
Absolutely Jim – ICI is all about bottom line – heartless … BUT … like you discovered in residential real estate it’s all about the emotion.
Thank you for taking the time to comment my friend!
All Good Wishes,
Well said, Michael and I agree with the article. Honesty goes a long way.
So glad you found value you in it Betty. Hope all is well by you!
All Good Wishes,
Excellent article…I really enjoyed it, well said
Most kind of you to say Debbie and so glad you enjoyed it.
All Good Wishes,