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SELLING |
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TECHNOLOGY |
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REAL ESTATE NEWS |
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BROKERAGE
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GENERAL
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This article was
published on: 10/01/2005
SELLING:
Negotiating
BY MICHAEL BENOLIEL
Deal like a pro
Think fast.
You’re working with buyers who are interested in a house that’s been on
the market two months; most houses in your area are selling in two to
three weeks.
Your buyers really like the house, but they
want to come in low, figuring the sellers must be desperate. What advice
do you give?
It all depends.
Factors such as the sellers’ and buyers’ motivation, the condition of
the house, how you present the offer, and even your reputation will
influence whether you’ll be able to successfully negotiate the
transaction.
How do you weigh all these factors and
ensure your buyers get their house? For that, you need to learn the
three skills possessed by all great negotiators: mastering the
substance, building trust, and managing the process.
Mastering the substance
Before you start offering advice to the
buyers, you need to do your research, learning everything there is to
know about the deal you’re negotiating.
That means having a thorough grasp of
federal, state, and local regulations; financing; closing costs; and
inspection details. It also means understanding the consequences of
interest rates and market conditions. And it means comprehending these
issues well enough to interpret them for a client.
Are interest rates heading up? Then the
buyers may be shooting themselves in the foot by prolonging the
negotiation. Are the buyers beginning a lengthy process of looking for a
bigger house, or are they anxious to buy something quickly? Are they
scaling down or buying up? Are the homeowners discretionary sellers—in
the market only if they can get top dollar for what they have—or are
they moving out of town and operating on a tight deadline?
Any of these factors can become a
negotiating point—and it’s not always a matter of holding your cards
close to the vest. Knowing what buyers especially like about the house
and conveying that to the sellers often facilitates the deal because
many sellers want to sell their home to “someone who will love it the
way we have.”
Building trust
Trust—the confidence that the other side’s
intentions and behaviors are what they say they are and what we expect
them to be—is the most important outgrowth of relationship building.
Trust means your clients know you’re watching out for their best
interest. Trust also means the people on the other side of the
transaction know you’re bringing them a good offer and, if they accept
it, the deal will go through.
You can’t build trust overnight.
Being patient, commiserative, and a friend to your clients eases the
trauma that sometimes comes with the negotiating process. Show that you
listen carefully to clients’ wishes, make the process pleasant, and
don’t apply too much pressure. You’ll have an easier time negotiating
the deal, and you’ll pave the way for future opportunities. Satisfied
clients will come back and refer friends.
It’s just as important to build trusting
relationships with other salespeople.
Socializing at broker open houses creates friendships. Following up on
promises and being true to your word earns respect. Treating other
salespeople fairly when you’re the listing agent fosters similar
treatment toward you when you’re not the listing agent.
Managing the process
You’ve learned all there is to know
about the deal. You’ve built
trust with all the parties. Now you need to manage the negotiating
process itself—that is, all the decisions and behaviors that take place
at the negotiating table.
First there’s the strategy.
At this point, you should be ready to counsel buyers on whether their
lowball strategy will bring a counteroffer or merely insult the sellers.
Emotion control is another form of strategy. You might have to convince
your clients to concentrate on the ultimate goal—the house they
want—rather than do something impetuous that might derail the deal.
The unpredictability of the negotiation
process makes flexibility and attentiveness essential. Listen carefully
to the other side for bargaining clues. If the sellers are very
particular about the settlement date, for example, agreeing to their
date might enable the buyers to pay a little less. Do the sellers want
to take the window treatments and light fixtures with them? Do they want
to be able to rent back from the buyers for two weeks? Accommodation
often can make an offer more competitive.
Momentum is important too.
This is an emotional process and if it becomes too much of a hassle,
people can “fall out of love” with the house. But there’s another side
to that advice: Sometimes, if you can’t get an agreement, it helps to
step away for a little cooling-off period.
Pay attention to the pace the other side
is setting. When you get an
immediate counteroffer—indicating you’ve piqued the sellers’
interest—responding to the counteroffer just as quickly demonstrates
your buyers’ seriousness.
If, on the other hand, the negotiation has
been going on a while and doesn’t seem to be going anywhere, you might
be able to spur a little anxiety on the other side by taking a longer
time to respond.
A deadline is a powerful tactic, but one
that can work for or against you. Ultimatums can stir emotions and
elicit hostile, aggressive responses, but they also can generate
action—when a buyer is trying to decide between two houses, for example.
Negotiating can be stressful, even
exhausting, but it can also be an unusually satisfying mental activity.
Whether you’re negotiating a peace treaty or the contract for a house,
approaching the negotiation with good information, trust, and an
understanding of the process will give you the satisfaction of having
created something of value for both sides.
Benoliel’s book,
Done Deal(Platinum
Press, March 2005), is based on interviews with 25 master negotiators in
the fields of business, diplomacy, sports, labor, politics, and real
estate. The author also is director of the Center for Negotiation
(www.centerfornegotiation.com).
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