As a real estate agent, your income is determined by your ability to close the deal. To successfully master the art of real estate negotiations, you’ll want to find the most creative and powerful negotiation strategies. Finding clients is only the first step in the real estate process. The next important step is negotiating with the other side. To help you prepare, we’ve put together some advice on how to handle real estate negotiations, including key strategies that will help you close the deal.
Understanding real estate negotiations
The art of negotiation includes two or more parties attempting to find a common middle ground that is beneficial to both sides. Real estate negotiations usually end up with one or more parties compromising or settling on mutually agreeable points. A sales transaction can literally have hundreds of potential variables. To best serve the negotiation process, a purchase contract offer can be adapted in many different ways. Details such as the price, closing time range, seller credits, and the requested loan contingency time periods for numerous contractual checklist items (e.g., loan qualification, home inspection report, appraisal) can all be modified.
Remember: 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.
Be proactive, not reactive
During real estate negotiations, it’s better to be proactive rather than reactive. It’s important to stay positive, act from a position of strength, communicate clearly, and listen with empathy. Try to avoid being negative and reactive, acting from a position of weakness, and not listening to the other party’s true needs and interests.
“We have two ears and one mouth so that we can listen twice as much as we speak.” – Epictetus
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.
Asking questions leads to positive answers and outcomes
In order to close a deal, both parties need to be flexible and open-minded. Be willing to compromise and change your own mind. When trying to persuade someone else to change their mind, get them to focus on questioning their own perceptions or statements.
In debates, many people will focus on a definitive statement made by the other party, such as “you’re wrong” or “the roof is 100% fine with no leaks,” as opposed to questioning their own beliefs. Changing one’s mind first begins with changing the way we ask ourselves the most empowering questions. Questioning our own thoughts then, in turn, leads to a more flexible and open mindset.
For example, one party may say emphatically, “I will walk away from this negotiation table if you don’t agree to give me a $10,000 credit to fix the roof leaks.” A more positive way to express this same concern is to ask the seller 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 that they are the ones offering mutually beneficial solutions.
Key real estate negotiation strategies
To increase your odds of success, use the following key strategies when conducting real estate negotiations.
- Have a positive attitude. Smile, be positive and make the other side feel welcome and appreciated. At the true core, we all just wanted to be liked or loved. Be likable, and the other side will want to make you happy.
- 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. Someone may be offended by a typed comment which was truly benign, neutral, or even meant to be funny.
- Check your body language. Don’t sit in the conference room with your arms and legs crossed. This conveys to other people that you may be closed-minded, angry (another side of fear), reactive, or hard to please. A better option is to have an open posture and a smile on your face. Try to look the other people in the eye as much as possible to help you seem more honest and trustworthy.
- Find common ground. 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 the options you present, provide them with alternative options backed with solid evidence.
- Do not become emotionally attached to the deal. Even if you desperately need the commission for this one real estate deal, please don’t act out of reactive fear. Ironically, the fear of losing the deal can be sensed by others in the room, and, in turn, can push them away. Deal with the facts of the real estate transaction as opposed to the emotions.
- Show your good sense of humor, when appropriate. Once another person smiles or laughs, they will become more open-minded and receptive.
- End the negotiations on a good note. Before walking out of the room, make sure everyone feels positive about the outcome of the real estate negotiations that have just taken place. Shake hands, thank each side for their participation, and talk about the next positive steps in the process.
Few things in real estate will make you smile more than a satisfying and productive negotiation outcome. If the other side is smiling too, then that is the sign of a very healthy and profitable sales transaction. It means you are well on your way to mastering the art of real estate negotiations.