Negotiation Techniques for Real Estate Sales
Negotiation is one of the most important skills real estate salespeople need to have. Here are six real estate negotiation strategies to help you succeed..
1. Willing buyer, willing seller:
The real estate market fluctuates regularly, and the motivation of prospective buyers and sellers changes based on both how the market is behaving, and what they need.
For example, if the potential buyer just wants a bargain or can not go over a set purchase price without urgency of completing a sale, they may not negotiate. On the other hand, if the seller just wants a high price and do not care if they sell or not, they may not negotiate below the listing price.
Of course this is market dependent, If we are in a sellers market sellers can be stubborn because buyers competition will drive the price up, sometimes above what the property is worth. And in a buyers market buyers can hold back because sellers “desperation” will encourage them to lower the sale price through a negotiation process.
As a general rule, if the only person motivated to negotiate and make the deal happen is the real estate salesperson, it simply won’t happen.
Find a motivated home buyer, and a motivated seller, and your ability to gain an initial offer and complete a sale and purchase agreement will go up significantly.
2. Use silence:
Silence is powerful in negotiation. The one who speaks first has to put their cards on the table, and the one who has waited is able to take the time to consider and formulate a response.
If you are in a position where you can take a moment, consider waiting to hear from the other party, or invite the other party to share their offer or opinion so you can respond.
3. Gather information:
One of the most critical points. If we do not know what we are walking into we will not be able to provide solutions.
When negotiating with sellers it's important to understand the following questions:
· Why are the owners selling?
· How long have they been on the market?
· Have they had any offers?
· What else is selling in the area and what are the prices?
When negotiating with buyers it's important to understand the following questions:
· Why are they buying?
· How long have they been looking?
· Have they placed any offers before and what happened?
· What else is selling in the area and what are the prices?
Gathering this information allows us to negotiate through to effective solutions and guide buyers and sellers alike through the current realities of the housing market.
4. Adjust the negotiation to the involved parties:
Personalities and cultures influence a lot of how people negotiate.
Some people and cultures get right into the negotiations, with others some time need to be spent prior. Some stretch the negotiation process over a longer period of time, while others want it done as quickly as possible and without stopping. Some just want to win, while others look for solutions.
Understanding who we are dealing with crucial for a successful negotiation.
5. Time frame:
People who are working to tight deadlines need to negotiate quickly, meaning they are more likely to negotiate.
As a general rule the person with the least time and greatest desire will compromise more in the negotiation, and the one with the least time and lack of desire has higher potential to walk away from the negotiation to wait for more satisfactory terms.
Understanding time frames can help you to support your prospective buyers and sellers, allowing you to guide tem through the process effectively.
Encourage your prospects to enter negotiations before it become a matter of urgency for them, to allow them to have the upper hand in negotiations as much as possible.
6. It is about the money but it is not about the money:
Yes, people do want to achieve the best financial results for themselves. The buyers goal will be to pay as little as possible, and the sellers goal will be to get as much as possible for their property.
However, in most cases people do not buy or sell for financial gains unless they are developers, traders and investors. The primary motivation is usually because a change in their circumstances dictates it, being a catalyst for the move. That motivation is the most important aspect to consider, and the financial negotiations will follow.
No negotiation is ever the same as we are dealing with people and situations that always change. Hopefully these six points will help you be prepared.
To learn more about real estate sales techniques, take a look at our online courses.