You Call That Negotiating?
You Said We Had the Competitive Advantage!
ROI - Means, Return on Investment.
Where is my Return! Huh Realtor? ...HUH?
I want this!
You want that!
How do we come to a meeting of the minds?
Real Estate Negotiation Do and Do Not
Let's discuss this deal.
We both want it to happen... How are we going to make it happen?
I got goals. You got goals. I'll give this. You'll give that... SOLD!
In Real Estate the thing most debated is PRICE.
I want a higher price. You want it lower. Usually we meet in the middle.
"I offered you a fair price. You should have taken it."
"I told you I wanted $800,000 and not a penny less."
"I'll give you $700,000... CASH!"
"Make it $750,000 and the house is yours."
"Done! You just sold a house."
The thing about great negotiators is they always look calm but they have been working really hard to get ready for this meeting. Research, facts, data all makes a great negotiator's position better.
Know thy enemy!
The negotiator that knows who they are up against has a better chance of making a great deal.
"Agreed. Let's shake on it!"
The usual tactics for negotiation starts with a seller, with a property they wish to sell, being wise enough to set a price much higher than they actually are trying to get. This is because they want to have room to lower the price once they begin to bargain and barter.
Of course, the buyers start the bidding far lower than the asking price. This is called lowballing. Buyers wish to get the Seller to come down in price some.
"How much are you asking for this?"
"Make me an offer."
In Real Estate, there are lots of other things that could be part of the negotiations besides just the money/price debate. Sellers try to sweeten the deal by throwing in the dishwasher, the washer and dryer, some furniture, perhaps a microwave, maybe even the TV.
"Well, you think it over but do not take too long. My offer expires at noon tomorrow."
Are you ready and willing to walk away from this deal? If your opponent thinks you are just bluffing, you may end up NOT getting the deal price or terms that you wanted. You are at the other party's mercy if you do not have any other options lined up just incase the deal you are working on falls thru.
You should always have a plan B and possibly a plan C too or else you could end up giving away the farm during negotiations.
Never put yourself in the position of having to accept a deal. What do you have to bargain with if your client orders you to try to get the best deal you can but adds: "If their side gives you an ultimatum then accept the terms they set for the deal. Under no circumstances are we to walk away empty handed. I want this deal, no matter how bad their terms are."
All you have, is your pokerface to rely on, in the above situation. Yes, bluffing does work sometimes. Just remember that this is not a card game. There are other people involved in Real Estate that have a say in what a property is worth too.
You have insurance agents setting a value on the property to write up their policies. You have appraisers saying what the place is worth too. Lenders want to know how much collateral value to assign to the property. Property Inspectors are looking over the structural flaws and analyzing every nook and cranny to make sure there are no costly defects that could lower a property's worth. The Tax Assessor is also calculating the value of the property.
You can hold out for Top Dollar but if you ask for too much, more than what everyone is claiming that the going market price is, based on recent similar property sales, your buyer will not get approved for their mortgage loan.
Do you see how negotiating comes down to preparing? Preparing gains you leverage.
Sure your Plan B is not as good as the deal you actually want and Plan C is worse than both A and B but you still have negotiating leverage because you do have those 2 other options.
Wise negotiators do not stop working on making their alternative backup plans B and C better and better just because they really want plan A to happen. Until you have a signed agreement with Plan A you can strengthen your negotiation position with A by improving your potential deal terms with B and C.
Your Plan A negotiating opponents will be more anxious to close the deal faster with you when Plan A knows there are other players also having similar discussions with you and those discussions just turned serious.
Do you see how the A-team you are negotiating against might be more inclined to make a deal with you if they are aware you are actively pursuing two other alternatives to their deal? They now have competition. You aren't so desperate anymore to concede to all their demands. There are other players in the game now. They could lose this deal.
Know that you should not rush a deal if you are not comfortable with the terms. But also know that the longer the haggling continues the better chance that something is going to happen that will sink the deal for you.
The sharks and vultures are always circling. Once a whiff gets out that something big is happening everyone wants to get their hand in on it.
If it seems that both sides are getting close to an agreement, it is time to make your move to do what you can to seal up the deal.
Never risk a deal falling thru over some small thing that really does not matter. Push for the finish line when the finish line is in sight.
Compromise. Make it happen!
"We are almost there. What do I need to do to wrap this up?"
"I am officially withdrawing my offer."
"I am going to make believe I did not hear that ridiculously, far too low, offer of yours."
"Can you explain how you came up with that Price?"
"I accept!"
"Sign on the dotted line."
Negotiation is an art. Negotiation is what Realtors get paid the big money to do.
For your Buyer Clients, make sure your Buyer actually has the funds at the ready to follow thru with any offer before you submit their offer for them.
Buyers can get pre-approved by a mortgage lender so their offers have more credibility and come with clout.
Your Seller Clients should list their properties higher than the price they want but not so high that only people expecting a much better house show up to view their place.
Remember, Buyers search for properties based on asking prices. They do not even key in searches for properties they know they cannot afford. So if you are advertising a high price anticipating dropping the price once the haggling begins, a rookie move, many Buyers, who could have bought your home may never see it.
Search Engines will not show your ads or your home's listing because searchers are not searching for homes that are out of their budget. You over priced landing in a higher price bracket where your home cannot compete.
Realtors too, do not want to bother with homes priced above their clients' means. No searcher or Buyer Client wants to be teased by seeing nicer, better homes than they can afford.
Great Real Estate Negotiators know that setting the stage for successful negotiations begins by choosing the right real estate property asking/listing/advertising 'For Sale' and 'For Rent' prices.
Remember... Everything is Negotiable!
TIP: Bring a few people with you to Negotiation Meetings that you know are going to be tough, even if you instruct your assistants not to say anything. Showing up with a Team of Negotiators can rattle your opponent and throw them off their game. They are less likely to play as many of the usual bartering and dickering stunts with your team staring at them from across the table.
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