Stories of classic negotiations always set parties at odds – like players on opposing sports teams ready to compete until the scoreboard declares a winner. In real estate, the scoreboard is the dollar amount paid or accepted, depending on which side you represent.
But what if I told you that your clients care less about money than you think they do? What if I said you might earn more money in commission if you change your negotiation style from “win-all” to “value-based”? Nearly 30 years in the business, having trained thousands of top-producing real estate agents, I’m here to tell you the latter works.
As the name implies, a value-based negotiator understands what both parties value and works with the other party to find amiable solutions that satisfy both sides. By looking at value holistically (instead of being hyper-focused on one element of the deal, i.e., price), the negotiator is equipped to offer creative solutions to concerns and avoid challenges that may stall or thwart the transaction.
Here are four ideas to start you toward your own value-based negotiations:
Before you head to the negotiation table, strategize and envision how you’d like the discussion to play out. Ask yourself the following questions:
- What outcome would I like?
- Who am I negotiating with and what would a win look like to them? (You move a step closer to success when you can walk into the room with a strong idea of the other party’s ideal outcome. The best way to collect this information is to pick up the phone and ask.)
- What am I missing to be effective? What key questions must I ask?
- What information will I share and withhold from the other party?
- What obstacles may arise during this negotiation?
Keep this ‘Negotiations Preparation Worksheet’ handy.
2. Focus on challenges … not sides.
Negotiations aren’t supposed to be tugs-of-war. Cool simmering emotions by looking at challenges and fact-based solutions. How many times have you or another real estate agent stated facts that were really opinions about property value, market share or even zoning laws? Rather than engage in debates that center on opinion, enter negotiations armed with expert analysis and facts. Present your market numbers at the beginning of the negotiation and keep them at the center of your discussion. Pull hyperlocal Market Snaps through Kelle.
Then, listen to the numbers presented by the other negotiator. You can then begin to work toward a number suitable to each side, based on facts.
3. Stay emotionally unattached.
At Keller Williams, there is a BOLD law that states “Keep your emotions between the lines.” This law is especially true for ideal outcomes in a negotiation. The more even-keel and fact-based you can stay, the stronger the chance for a positive outcome for your client.
4. Don’t race toward a solution.
We will pay for the house painting if the buyers don’t ask us to contribute to closing costs.
Sound familiar? Many times negotiators hit on a solution to a conflict and move on. The downside is often that neither side is pleased with the agreement. That’s because the negotiations weren’t value based. When you hit a stumbling block, pause and think outside the box. This is your opportunity to increase your value in your client’s eyes and defend your commission.
Here’s a strategy that works well when I am representing a buyer in a transaction:
Once the buyer has identified the property they would like to pursue, I call the listing agent and ask, “What are the most important factors in the home sale for your seller?” Often, I will hear one of two things:
- An ideal closing date for my sellers would be February 15, because the in-laws plan to be in town to help with childcare during the move.
- My sellers have been burned in the past by a buyer not having their financing on solid ground. So they would like to see the ability of obtaining financing with an approval letter versus a pre-qualification letter. If you can provide that, it will go a long way with them.
At the center of our culture at Keller Williams is a belief in “win-win or no deal.” I whole-heartedly believe that when your negotiations follow this principle, you will earn more closings, more referrals, and experience a richer real estate career.