Negotiation Strategies For Real Estate Agents 2022

Wade Webb on June 1, 2022

negotiation strategies real estate agents 2022It is amazing how little negotiation training most real estate agents have and most of the training they do have comes from battle scars and previous negotiations. When it comes to negotiation in all sales there are two schools of thought.

1. Win/Lose

2. Win/Win

Real estate is a zero-sum business. There are a fixed number of transactions every year in every market. Personal marketing and prospecting is a hunting expedition for those buyers and sellers. Every listing taken and every home sold reduces the balance available. That is why it is impossible mathematically for every agent in every market to become a high producer. It is simply a consequence of supply and demand. This should be a reality check and a warning to every agent. Become great at the skills essential for your success.

The Win/lose negotiation is, by its very nature, adversarial. There rarely are any long-term winners. If you want your business to be referral-based then beware… there will be none here.

The goal of win/win negotiation, on the other hand, is to reach an agreement that satisfies both parties. This includes the buyer/seller and the listing agent/buyer agent. In other words, everybody is happy and each side feels the other was fair. This is the holy grail of negotiation. Negotiation gets messy when trust becomes diminished.

A lack of trust does not necessarily infer dishonesty. More often it can come from a lack of preparation and a thorough understanding of the needs of the other parties. There is always a loss of authenticity when one appears incompetent or lucidly incoherent. So how can you improve your chances of achieving a win/win outcome? The answer is by knowing the type of person you are negotiating with. Knowing, or at least considering, his or her personality type can give you an honorable edge in negotiating. Let’s look at the four personality types we face in negotiating and understand their natural tendencies in negotiations.

1.) THE DOMINANT OR DRIVER

These are extroverted people who need to direct traffic, need constant challenges and love to win. They believe winning isn’t everything, it’s the only thing. These people are direct and oriented toward the bottom line. They typically are win/lose style negotiators, but won’t usually acknowledge it. The best way to negotiate with this type of person is to go to the bottom line and work backward. Offer alternative choices and let them make their own decisions. Never attack their position, give facts in a logical flow and give them the perception of winning.

2.) THE SOCIAL BUTTERFLY OR EXPRESSIVE

These people love to talk and interact. They are personable, want to be liked and make quick, impulsive decisions. They usually have a great sense of humor and are good team players. Third-party endorsements work best with this type of person. Quick tips for negotiation: Don’t bother them with the bottom line or facts and figures. Keep negotiations good-natured and light-hearted.

3.) THE COMPLIANT OR AMIABLE

Keeping the peace and avoiding conflict is most important to these people. They are amiable, patient and relaxed. They usually are unemotional during negotiations, slow to decide and will look for a long-term relationship. The best negotiation approach here is to show genuine interest in them personally. Listen, be patient and take your time. Don’t do hard sells! COMPLIANTS need to know you will deliver on what you promise.

4.) THE ANALYST OR ANALYTICAL

These are the perfectionists of the world. They are cautious, detailed, accurate and analytical with high standards. They want proof, facts, data and more data. Follow the rules with these people and avoid too much creativity. Be prepared with data and be direct with that data. To be successful with this type of person, it’s important for you to be organized and provide lots of detail. Go to the point and avoid small talk. They will tend to get stuck on a single point (usually price) and will want to win on that one issue only.

HOW CAN WE SPOT EACH STYLE?

First, it is important you know what personality type you are. Then keep your eyes and ears open.

1. If you are dealing with an outgoing person with a neat freak aura then most likely he or she is a DOMINANT personality. Dominant personalities also tend to like cutting-edge technology and acquiring that technology.

2. Someone who is talkative with a relaxed, lived-in look and casual appearance will probably be a SOCIAL BUTTERFLY. They also like to be on the cutting edge of technology and like to buy things.

3. COMPLIANTS just want to do what’s right for everybody. They sometimes appear a little insecure. They are the clients who want to do the right thing and are generally slow to decide. But they are very loyal and will be a consistent referral resource.

4. ANALYSTS always will ask for more detail. They also will want to know how you arrived at your CMA for example. They are fact based.

WHAT ARE THE COMMON ELEMENTS TO NEGOTIATE SUCCESSFULLY WITH ALL FOUR TYPES?

The main point to remember during negotiations is it’s about the client, and their wants and needs. Do your prep work, recognize the types of people you’re dealing with, and have these tips in mind to keep negotiations positive and smooth (win/win!):

•Ask a lot of questions.

•Don’t become emotionally involved.

•Be totally prepared with clear factual details.

•Treat people with friendship just as you would want to be treated.

 

Strength and courage,
Wade

Negotiating Strategies For Agents In This New World

Wade Webb on April 29, 2020

real estate negotiation strategiesThis week I am sharing from a wonderful negotiation instructor and friend of mine Suze Cummings some great strategy for us all in this unprecedented time. Stay home and stay safe but if you have a client that needs to buy or needs to sell or you have a deal that is in jeopardy of not closing, your negotiation skills are going to matter more than ever. I thought I’d take an opportunity to review the negotiation fundamentals and talk about how they might be beneficial for the next few weeks as we go through the peak of the health crisis and how they might be beneficial in the months after that when the market is sure to be unsettled, uncertain and difficult to predict. Many of you are CNE or MCNE grads and this will be a review for you but let’s sharpen those skills so you can serve your clients well.

Collaborative versus Competitive Negotiators.

The only way to get a deal done right now is to be highly collaborative.  You’ll need to work closely with the other agent on every aspect of the transaction from virtual viewing, arranging inspections, crafting offers, overcoming both parties’ unique challenges and finding the common ground or win-win outcome that they can both agree to.   I’ve been working closely with my clients on some pretty complicated deals these past couple of weeks and in each situation, I am 100% sure that the only reason those deals went together was because both agents were deeply committed to working together to overcome all of the challenges.  The creative problem solving that was required took the input from both agents (and outside help as well)

By definition, a competitive negotiator is looking to win and have the other side lose.  It’s a zero-sum game and they don’t care about trust, relationships, emotions or anything else except winning.   While a degree of competitive behavior can be beneficial in some cases where you have a strong power advantage, it will destroy any chance of crafting a deal in this environment.

While it’s impossible to predict what the market will do when we get through the peak of the health crisis, we are likely to see some competitive negotiators come back into the market representing buyers who want to take advantage of desperate sellers.  We will cover this in much more detail as those days unfold but know that having a clear understanding of the benefits of collaboration and not being emotionally upset by an aggressive competitive negotiator are the first steps to being able to get deals done.   We are likely to have the opportunity to learn a lot about the aggressive low-ball offer – a classic competitive negotiation tactic that is very common in buyers’ markets.

Stands, Positions and the SAM Model

I won’t sell my house for a penny less than $x.  This is a classic stand and our business is full of them.  It could be about price, or commission, or timing, or marketing.  In the CNE courses, we use the SAM model to go below the stand to understand more about what is going on the client and help them make good decisions.  The stands will often be firmer during times of duress when people are afraid.  It’s a natural bit of human nature and now more than ever, you need to see past the stand, ask questions to understand what is truly going on and tap into the emotions so you can help them make the best decisions.   This takes time, patience, empathy and skill.  You need to build a high level of trust so that they will be open to sharing the important details of their situation with you. As we pass through the peak of the pandemic, and we see some trades start to happen, it’s likely that pricing will be lower than the peak that occurred in February.  It’s possible that we could see prices declining for some time.   Your ability to see stands and be able to get below them to the stuff that matters will be critical.  The SAM model is a great tool but also sharpen up on your questioning skills, trust building and communications.

Communication Principle

I’ve talked in the past about how much more effective you can be in a negotiation when you are face to face; and now, we can’t be face to face. It’s tempting to flip an email off to someone but think carefully about your best means of communication.  Research says that when we communicate by written word only, our chances of persuading someone is about 15%. When we more to spoken words as in the phone, there is more information and immediate response and the rate increases to 35%.  Face to face it jumps to 60%.   In my experience these numbers are about right except if you are a highly skilled negotiator in which case each number might be 10-20 basis points higher. When negotiations get more complicated, communication matters more.  This is why zoom and other video conferencing platforms are so popular now.  I would suggest that whenever possible in any negotiations, you try to meet with your counterparts on Video and if that isn’t possible, use the phone.   Leave email for sending information and following up. High level negotiation skills are going to be a critical part of your return to productivity when transactions start to occur again.  Take the time now to sharpen them up.  Take an online CNE or MCNE course or if you are financially vulnerable, don’t spend the money and read some books.  Here are a few recommendations.  Getting to Yes is the number one recommendation.

 

Strength and courage,
Wade