As a real estate broker in Washington, your income is determined by your ability to negotiate and close the deal. To help you prepare for your career, we’ve put together some strategies to help you negotiate for your client’s best interests.
Key Takeaways
- Understanding market conditions and defining your client’s goals are essential in guiding the negotiation strategy and giving you leverage.
- Listening to the other party’s needs and offering multiple solutions can help you find common ground, making both sides feel more in control and increasing the likelihood of reaching a deal.
- Emotional reactions and acting out of fear can negatively impact negotiations. Staying calm and focused on solutions is key to maintaining a strong position.
- Knowing your client’s bottom line and being ready to walk away from a bad deal can strengthen your negotiation position, often encouraging the other party to make concessions.
Understanding Negotiation in Real Estate
At the heart of a real estate negotiation lies two or more parties attempting to find a common middle ground that benefits both sides. This is more difficult than it sounds, as a sales transaction can literally have hundreds of potential variables. After all, details such as the price, closing time range, seller credits, and contingency periods can all be modified.
The real estate sales process goes smoothest when each side of the negotiation table walks away feeling as if they have won something important to them. With that in mind, here are some real estate negotiation tips and strategies for brokers just getting started.
11 Real Estate Negotiation Tips & Strategies
To increase your odds of success, use the following strategies when conducting real estate negotiations.
1. Know your market.
Understand the current market conditions, including trends in pricing, inventory levels, and competition. This knowledge will give you leverage during negotiations.
2. Set clear objectives.
Define your client’s goals and priorities before entering negotiations. Knowing what they want to achieve regarding price, terms, and timeline will guide your negotiation strategy.
3. Negotiate in person instead of online or by phone.
We react more to other people’s voice tones and body language, both consciously and subconsciously, than to their spoken words. When using email or texts to negotiate, tones and intentions are not easily understood. For example, someone may be offended by a written comment that was genuinely benign, neutral, or even meant to be funny.
While negotiating in person, don’t sit in the conference room with your arms and legs crossed. This conveys to others that you may be closed-minded, angry (another side of fear), reactive, or difficult to please. Try to look others in the eye as much as possible to help you seem more honest and trustworthy.
4. Listen actively.
Listen to the other party’s concerns, preferences, and motivations. Understanding their perspective will help you tailor your negotiation approach and find common ground. Sadly, most people prefer to speak more than listen during hotly contested real estate negotiations. This often leads to no deal for anyone (a “lose/lose” situation). Listen closely to the other party. They are likely telling you the easiest way to find the quickest solutions.
5. Present multiple options.
Offer multiple solutions or alternatives during negotiations. This shows flexibility and gives the other party a sense of control, increasing the likelihood of reaching a deal.
6. Stay calm and professional.
Even if you desperately need the commission for this one real estate deal, please don’t act out of reactive fear. The fear of losing the deal can be sensed by others in the room and, in turn, can cause the deal to crumble. Avoid emotional reactions and focus on finding solutions.
7. Be proactive instead of reactive.
It’s better to be proactive than reactive during real estate negotiations. It’s important to stay positive, act from a position of strength, communicate clearly, and listen with empathy. Avoid being negative and reactive, acting from a position of weakness, and not listening to the other party’s needs and interests.
8. Use questions as a negotiation strategy.
During negotiations, one party may say emphatically, “I will walk away from this negotiation table if you don’t agree to give my buyer a $10,000 credit to fix the roof leaks.” A more positive way to express this same concern is to ask questions like “How much do you think a professional roofer will charge to fix the water leaks?” or “What sort of sales price reduction or credit can you offer us in exchange for this roof situation?” This way, the other party feels they are offering mutually beneficial solutions.
9. Use timing to your advantage.
Understand the importance of timing in negotiations. Be strategic about when to make offers, counteroffers, or concessions based on market dynamics and the other party’s deadlines or motivations.
10. Document everything.
Keep a thorough record of all communications, offers, counteroffers, and agreements. Clear documentation can prevent misunderstandings and protect your client’s interests.
11. Be prepared to walk away.
Know your client’s bottom line and be prepared to walk away from a deal that doesn’t meet their objectives. This willingness to walk away can strengthen your position and encourage the other party to make concessions.
One more tip: If you are struggling during negotiations, create a list of items that both sides can agree on toward the start of the meeting. Then, focus on resolving the other issues that need to be worked out with some form of compromise. If the other side doesn’t agree with your options, provide them with alternative options backed with solid evidence.
Like any other skill, negotiation techniques can be learned. To become a better negotiator, enroll in the Real Estate Negotiation Institute (RENI). RENI offers two negotiation certifications: Certified Negotiation Expert and Certified Buyer Agent Expert. By enrolling in these certification courses, you’ll learn practical negotiation strategies that apply to all phases of the real estate transaction.
Become a better negotiator by enrolling in RENI today.
