RISMEDIA, September 1, 2009—A survey of buyers and sellers of real estate revealed that, from their point of view, one of the most valuable services real estate practitioners provide is our ability to negotiate on their behalf. From my experience, it appears that, in many cases, the clients are getting less than they are paying for.
Are you a good negotiator? Do you frequently succeed in closing the gap between the parties’ expectations and reality? Have you mastered the skills necessary to arriving at a solid meeting of the minds? Do you love the pressure and high drama of the negotiating table?
More than one observer has suggested that other cultures are more comfortable bargaining, and actually enjoy the social interaction as a separate benefit of the negotiation process. One possible explanation is that we are a comparatively new culture, established after the development of monetary systems.
To a certain extent, we have a “price-tag” mentality. And, we are conditioned, to a certain extent, not to ask for concessions by that elitist quote, “If you have to ask how much a thing costs, you can’t afford it.”
In the absence of such systems, the value of a thing is far from standardized. Value is the product of the deal made between the parties.
In real estate, for several years, market conditions eliminated the need to negotiate. No price was too high. Sellers had all the power. Negotiating skills have been gathering dust. More recently, it was understood to be a buyer’s market and the seller would have to take whatever he or she could get.
Then came the declining market and the balance shifted from seller to buyer, and buyers wanted and continue to want bargains. This added a sort of “take it or leave it” attitude to the dynamic.
The market is on the move again, and it may be time to beef up those negotiation skills so here are some thoughts to consider.
Empathy
The better we understand the other party, the more likely we are to bridge the gap.
Face to Face
The point of negotiation is to get signatures on paper. You cannot do that on the phone. You lose the benefit of eye contact and the nuances of communication. Not to mention, you could have a bad connection.
Timing
Make sure you have ample time. Do not begin to negotiate until they are ready. No checkbook, no deal. If they leave the negotiating table without making a commitment, you’ll have to start all over again.
Self-awareness and emotional control
It’s not personal…it’s business. Do not become caught up in the emotion. Like a mediator, your goal is to get the parties to come to mutual agreement. That takes a lot of patience. It’s a chess match, not a therapy session.
Know your bottom line.
What do you want? State it clearly. Work toward what is best for all parties, not just getting your way at all costs.
Counter everything
In many cases, the psychology of negotiating isn’t about money or a low price, it is about the security of not having overpaid or paid more than necessary. When we accept an offer, we can leave doubt. By countering, even the most insignificant detail, we make them say “yes” to us, and they are less likely to want to renegotiate during escrow or just before closing.
Commitment to succeed
Negotiating successfully requires a sort of mutual surrender. Both parties must willingly accept that in order to find a middle ground, something must be given up. It isn’t really a win/win…it’s a lose/lose…but with the greater goal of the mutual benefits of striking a deal.
Willingness to walk away
Occasionally, no middle ground can be found and the parties cannot be brought together. Sometimes, the best deal is no deal. If you begin the process with that in mind, you’ll negotiate from a position of strength.
Remember to remain flexible and look for a wide range of options. Our clients are counting on us and negotiating is something a computer cannot do. Let’s give them their money’s worth.
George W. Mantor is known as “The Real Estate Professor” for his wealth building formula, Lx2+(U²)xTFP=$? and consumer education efforts. During a career that has spanned more than three decades, he has amassed experience in new home and resale residential real estate, resort marketing, and commercial and investment property. He is currently the founder and president of The Associates Financial Group, a real estate consulting firm.
Mantor can be reached at GWMantor@aol.com.
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