Negotiating is a skill that can be learned and improved over time
One of the secrets of becoming a good negotiator is being over prepared. You should be in a relentless pursuit of knowledge to become successful in any field, but many would argue that this is especially so in Real Estate. When representing a buyer, don’t just pull a few comparable sales reports before negotiating an offer price. Dig into the “comps” and understand exactly what makes the closed properties similar and what makes them different. Call the listing agent and ask a few questions about the property such as if they have fielded and rejected other offers. If you are representing a seller following a home inspection that vaguely indicates “furnace is nearing the end of its useful service”, do some research on that particular furnace. Get estimates on the cost of replacing a furnace and what warranties are offered. Be sure that you have already talked with the seller before even listing the property of potential issues such as an old boiler and have a plan for how you might deal with it should the issue arise.
Know Who You are Negotiating With
Get to know all of the parties to a transaction: the sellers, the buyers, their families, their real estate agents, their attorneys and their lenders. Do some research on the parties. A quick Google search or review of social media may reveal a lot of information about the other side of a transaction. Maybe you learn that the sellers’ kids just graduated high school, they got a new job, reached retirement or need to move to care for an ailing parent. All of these reasons will give insight into why they are selling their home and may help you connect better relationally. You will also want to build rapport with the other agent and build a sense of working together on a transaction in the best interest of your clients.
Having the attitude that you want everyone to win, will help to lower the defensiveness of all parties. Some agents like to take the approach of defeating their transaction partners. Real Estate transactions involve too much money and personal investment for either the buyer or the seller to feel like they have lost. Once they sign a contract, the parties are in a relationship. It is never healthy to think you should defeat someone in a relationship. In litigation, judges will often advise the parties that a good settlement is one in which neither party is satisfied. This is more like a lose-lose proposition. How can both parties win?
Discover the Underlying Motivations
Underlying any issue might be motivations that aren’t obvious from the surface. Often, the basic problem in a negotiation lies not in conflicting positions, but in the conflict between each side's needs, desires, concerns, and fears. When you can discover what these underlying motivations are, you can address these concerns as you negotiate. You can discover these motivations by asking the question “Why”? You can theorize and try to put yourself in their position and write down all the reasons why you might respond in the same way that they are responding. You can also just directly ask the other side “Why?” and be sure to let them know that you are asking this question to better understand the situation and not to use it against them or to justify your own position.
View Everyone as a Prospective Future Client
What if you approached every negotiation with the mindset that you were establishing your reputation as both knowledgeable and fair? Your preparation and win-win attitude can win the respect of everyone at the closing table. You would likely not be so unreasonable – or maybe the better word is impersonal - in your negotiating if you knew that you could win referrals from the other side by how you perform in the transaction. The other agent might be part-time or deciding to leave real estate and they send you future referrals because you did not take advantage of their lack of knowledge. You represent the buyer, but the seller recommends you to their friends and family because they respect how you handled the negotiations.
One thing that you won’t have to negotiate is your commission split if you decide to work with Joseph James Real Estate. We have built an agency with real estate agents in mind and offer an incredible 95/5 commission split! Joseph James Real Estate agents keep more money from every transaction they close. Are you ready to earn more? Contact us below.