The New Focus on Strong Negotiation Skills
When I first wrote this blog post on negotiation last year, it was really designed to help relocation professionals get budgets approved and what they want from their bosses. Now, negotiation expertise in real estate has taken the spotlight for a different reason. Besides negotiating the sale of a property and how much the consumer will pay to sell it, real estate professionals representing buyers must now negotiate how they will get paid and by whom. And before relocation professionals can accept referrals from corporations or relocation companies, they must clearly understand how their company and relocation agents will be paid. They will also need to work with the consumers who come as referrals via website portals and from other brokers because everyone expects to get paid either for their services or as a referral fee for delivering the lead.
The unique nature of real estate sales.
Due to the nature of real estate, very few properties are the same, so there is no cookie-cutter pricing. Even when we buy a new car, though specific makes and models are created the same, variables determine the final price: the color, the add-ons, the taxes of your state, the financing, and how good of a negotiator you are. The dealers have a ‘fixed’ price, hoping you will pay more, which increases their profit. But as we know, it isn’t a fixed price. While real estate commissions have always been negotiable, there is new focus on the consumer’s ability to ‘save’ a lot of money in the transaction based on distorted media representation. It’s on us to deliver clear messaging on how consumers interpret the changes.
There are even more variables in real estate, such as the size, age, condition, location, and style of the home. Depending on an experienced professional to evaluate the competing properties and previous sales is critical to pricing it right. Then, you need someone who knows how to get it in front of the most potential buyers. Then, once a buyer is interested, they help negotiate the best sales price for you. Or if you are a buyer, they must help you find the best property and neighborhood. Then, they must ensure your offer is competitive enough to get you a fair shot at securing the home. Then, they must ensure all legal requirements are met and documents are submitted to complete the transaction and secure the funding. The agent is the conductor for the many players in the real estate orchestra. They make sure everyone does their part.
When we buy a car, we are up against experienced salespeople who know their bottom line. When we buy a home, we have the luxury of having an experienced agent act as our ally and advocate in the process. The good ones deserve to be assured of compensation upfront for the value they will bring to the process, just as a listing agent is assured of compensation when they take the listing.
Focus on the end game.
Our end game in any negotiation is to get what we want and to satisfy all parties to a certain extent. Before we enter any negotiation, the key is not to get emotional no matter how the other person reacts, even if they try to provoke us. Understanding their position is vital to combatting any objection they might have so you can reason with them effectively. Choose the time of day carefully and always read the room and their body language.
While it would be lovely if we didn’t have to play the negotiation game, it’s just how it is. We have a terrible habit of asking a yes or no question to whoever is the decision maker. How would a buyer answer if you ask, “Will you pay my commission?” It’s super easy to dismiss someone with a ‘no,’ especially when they have never had to pay it. Then the agent finds themself in the defensive situation of asking why and trying to change their mind. The key is to keep ‘no’ from even being an option.
It’s more about the discussion to show:
What the agent is going to do for them
How agents were paid in the past and why that has changed
What are their payment options (pay the commission themselves, ask the seller to pay it if it isn’t already offered, ask for a concession in the transaction from the seller to pay the agent’s commission, use the listing agent basically as a transaction coordinator if they are unrepresented)
What the potential landmines or consequences are if they can’t pay the commission themselves (they might lose the home they are interested in, agents won’t work with them if there is no clear path to compensation, and the legal liability if they represent themselves)
Consider every discussion is a negotiation when you need permission or agreement.
Set your goals before you begin (pad them so you have some giveaways or trade-offs)
Determine your strategy to persuade the stakeholders
Clearly express what you want and why
Anticipate their objections and be empathic to them
Stick to the facts and be transparent
Listen to key phrases and words they use and repeat them
Lay out what the rewards and benefits will be by being transparent and sharing the value you bring and how it benefits them
Explain their options
Be willing to walk away or buy some time to let the other party think it over
To avoid the dreaded flat-out no, try these three things.
1. Make your request a presentation. I’m not talking about a long, elaborate diatribe. Instead, lay out what you and they will glean if you can do whatever you request. Use value-creating strategies.
2. Give them a choice. A former CFO I worked with taught me this tactic. When trying to present a difficult change, give people a choice. Now is the time to use your allies. If you need a consensus from a group, speak to any allies beforehand to get their buy-in. Ask the corporation or RMC to discuss the potential options and ramifications with the transferee. Make one of the choices more aggressive than the satisfactory one. Human nature dictates they will select the one you are set on as the lesser of two evils.
3. Try to satisfy all parties. Diagnose their barrier and determine the most likely concessions they will make. Know the bottom line of what you want to get out of the discussion. Assume that you might not get everything you ask for, but by asking for more than you want or need, you will likely come out with a win.
Negotiation isn’t about yes or no; it’s about getting what we want and leaving the other party satisfied that they got what they paid for.
"Successful negotiation is not about getting to 'yes'; it's about mastering 'no' and understanding what the path to an agreement is." ~ Christopher Voss, American businessman, author, academic, and a former FBI hostage negotiator.
