Real estate negotiating is a lot like dancing.

By
Managing Real Estate Broker with Cornerstone Business Group Inc 0225086119
http://actvra.in/4RRN

Real estate negotiating is a lot like dancing. Most negotiations follow a very simple Waltz. One two three, one two three, one two three. A buyer makes an offer, a seller counters and a buyer responds. In a waltz, both dancers complement each other as they flow together in a seamless series of movements that create a mutually fulfilling dance. And, then there is the Tango.

The Tango is quite different from the Waltz. If you have ever watched a good Argentinian Tango, there is a great deal of improvisation. The rules are not set in stone. Unlike the fluid movements of the Waltz, in the Tango, there is a conflict in who is leading and who is following. The dancers move back and forth across that imaginary line with a great deal of passion and a little aggression that is really part of the challenge. In the end, cooperation reigns and it is also a mutually fulfilling dance, but it differs from the waltz in that it generates a lot of emotion and intensity. In real estate, those are not words most Realtors want to connect with a deal, but they happen in some negotiations.

Fortunately, real estate negotiating is more likely to be a Waltz than a Tango, but agents need to know how to Tango if they are going to be good negotiators. If they do not, their clients may be taken advantage of and lose out.

It’s essential that all negotiations start from a place of honesty. Trying to trick someone during a negotiation is not only unethical, but it is also a legal minefield that could easily blow up when least expected. No amount of commission dollars is worth that. Keep it honest.

In a recent negotiation, my buyers made an offer. The seller countered higher. Unfortunately, it was above what the buyers were willing to pay in order to stay within their budget. The buyers countered slightly higher. This time, it was right at the top of their budget, and they did not have any additional resources to go higher. The seller countered even higher. At this point, I put on my negotiator hat, and I thanked them but explained that my buyers were at the top of their range and they would have to walk away. Within twelve hours, the seller came back and accepted their offer. That was a waltz. Both sides wanted more than they could get, but they were willing to cooperate in good faith.

How did I know the seller would meet our number? I didn’t, but if you listen to the tone of your opposing agent’s voice, or if you look at the tenor in an email, you can pretty quickly see that the agent is trying to feel you out and see if you might go higher. A short quip like, “Well, they just won’t go any lower,” or “We’ve had a lot of showings,” and “I’ve heard from a few other agents who are promising contracts.” That may all be true, or it might be an agent probing to see how committed your buyers are. The fear of losing a home they really want can be very motivating.

If any of those responses are true, the worst outcome is that the counter offer is outside of a buyer’s ability to meet. At that point, the seller assumes the risk of a buyer walking away. Do they risk it or do they accept the offer they know they have? They know they have an interested buyer. How long would it take for another interested buyer to come along? This is a good place for an agent to be honest and coach the seller in the possibilities. If the offer is ridiculous, of course the seller should stay in the active market, but if its within reason, it might be time to give serious consideration to the offer.

One of the first things I tell my buyer-clients is that they should never fall in love with anything that can’t love them back. That simple piece of advice tells them to always be ready to walk away. Some sellers, and possibly their agents, can become unreasonable in the negotiation process. If there is no space for movement to meet everyone’s needs, it may be time to walk away. An agent who is being intentionally difficult in an attempt to gain an advantage for his client, is just as likely to lose a potential buyer and to violate his fiduciary responsibility. This is where negotiations turn into the Tango. Buyers really need to think it through when they come up against an unreasonable seller, or a challenging agent. Is the house really worth the struggle ahead, and is it worth paying too much? This is a lessor scenario. In most cases, cooler heads will prevail, but there are those moments when emotions run high and both sides feel they are being taken advantage of.

The key to avoiding that, is to keep calm and keep everyone talking. If a seller genuinely wants to sell, and a buyer wants to buy, there is always room for give and take. I do caution my buyers away from making incredibly low offers on good homes. More than once, my sellers have advised me to refuse any future offers from specific buyers because of an insulting offer they made. Even with all of the coaching to not take low-ball offers personally, it still happens.

Another key to negotiation is to keep the offer within a reasonable range of the listing price. Offering 50% below list is rarely going to win a property, and it is just as likely to isolate a buyer. If the buyer agent has located reasonable comps to verify why the offer price is what it is, that is a door into the logic of the buyer. I have had agents send those comps to me with their client’s offer. Sometimes it helps and sometimes it does not. Sold comps are a look back at where the market has been, but market trends change and if the trend is moving up, those comps may not be as valuable. I leave a copy of the comps I used to generate the list price on the kitchen counter of my listings.

A buyer’s agent can look at the comps while touring the house. With that information, I have set the stage for the buyers to know the seller’s thinking process.  Having that information immediately available takes all of the mystery out of how the price came about. It’s not necessarily a greedy seller looking to make a killing on his home. No, it’s an honest homeowner trying to secure fair market value for his home.

One of the biggest hurdles in difficult negotiations is ego. All agents and both buyers and sellers need to keep their egos in check. If one side is determined to win at any costs, the battle is pretty much over. No matter which side I represent at that point, my advice is going to be “consider walking away.” It is hard to overcome an ego that is being challenged. The goal of all negotiations is to have a win-win outcome. In that, both sides make some concessions. The seller and buyer both yield a little ground. No one gets everything he wanted, but ultimately, everyone got a lot of what they wanted. In that respect, they all win something.

Those concessions may not be the sale price. They may include giving up on certain repair requests from a home inspection report. It might be lowering the closing costs subsidy. It might be offering a home warranty. It might be asking the seller to close early, or to take a home sale contingency. All of these items are negotiable, and they should be considered when a negotiation is taking place on a home. For everyone to win in the end, everyone has to be in the game. 

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Tony and Suzanne Marriott, Associate Brokers 05/24/2016 11:36 PM
  2. Bob Crane 06/14/2016 03:59 PM
  3. Winston Heverly 08/16/2016 03:55 PM
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Rainmaker
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Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

Excellent advice and fun analogy.  It is important to do a lot of listening while you negotiate so that you can make smarter decisions. 

May 24, 2016 11:02 PM #26
Rainmaker
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Jill Sackler
Broker Associate, Charles Rutenberg Realty Inc. "Said and Done!" - Long Beach, NY
LI South Shore Real Estate - Broker Associate

I really like the dance metaphor and the picture you've chosen also; especially, the way you described the Tango as emotional and agressive like many a negotiation.

Your "never fall in love with anything that can’t love them back" is similar to my "never cry over someone who isn't crying over you." It gives you back your perspective.

May 24, 2016 11:10 PM #27
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Brian Schulman
Coldwell Banker Residential Brokerage, Lancaster PA - Lancaster, PA
Lancaster County PA RealEstate Expert 717-951-5552

Mike, as a dancer, I appreciate your attention to the subtleties of both the dance and negotiations!

May 24, 2016 11:12 PM #28
Rainmaker
698,935
Rob D. Shepherd
Windermere/lane county - Florence, OR
Principal Broker ABR, GRI

If it was a waltz that would be great! It usually goes one,two,three kick. One,two.three kick.

May 24, 2016 11:28 PM #29
Rainmaker
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Tony and Suzanne Marriott, Associate Brokers
Haven Express @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ

Mike Cooper "The key to avoiding that, is to keep calm and keep everyone talking. If a seller genuinely wants to sell, and a buyer wants to buy, there is always room for give and take."  Absolutely - keep the emotion out of it - Re-Blog!

May 24, 2016 11:36 PM #30
Rainmaker
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Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

The Three Stooges had something called the Curly shuffle where Curley skipped and hopped backwards while kicking a foot in the air. Add a woo woo woo to this and anything can happen...

May 24, 2016 11:39 PM #31
Rainmaker
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Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Mike Cooper I think ALL negotiations need to be done IN GOOD FAITH, not as a thing we just do. So many agents think that they MUST counter any and all offers. There is a time to just accept the offer as written.

Bill Roberts

May 24, 2016 11:47 PM #32
Rainer
6,613
Chyna Smith
@ Homes Realty Group - Huntsville, AL

As a newer agent, this is great advice. Like everything else in life, negotiating is give and take.

May 25, 2016 12:41 AM #33
Rainmaker
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Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi Mike - this is a dance and but you can not over state or over bluff.  Good analogy!

May 25, 2016 12:48 AM #34
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Mike this is terrific.  And I have to ask, did you write this while you were watching the Dancing with the Stars finals?

May 25, 2016 03:00 AM #35
Rainer
133,483
Theresa Akin
CORPUS CHRISTI REALTY GROUP - Corpus Christi, TX

Love to dance but it better be short, because I get tired. When I present an offer I go over the comps one more time with my buyers. I also suggest they present their highest and best. Makes for smoother moves. Great post!!

May 25, 2016 03:21 AM #36
Rainmaker
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Roy Kelley
Realty Group Referrals - Gaithersburg, MD
Roy and Dolores Kelley Photographs

Congratulations on your feature recognition. This is great advice to share.

May 25, 2016 04:13 AM #37
Rainmaker
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Denise Hamlin, Broker/Owner
Cardinal Realty ~ 319-400-0268 - Iowa City, IA
Helping Happy Clients Make Smart Choices

Love the analogy. Great post with lots of good advice presented in a way that make it easy to understand. 

May 25, 2016 04:46 AM #38
Rainmaker
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Janis Borgueta
Key Properties of the Hudson Valley - Newburgh, NY
LIC RE Salesperson - Hudson Valley Homes for Sale

Doing the dance can be so stressful!! I guess a lot like those cotillion dance lessons back in sixth grade??

May 25, 2016 05:10 AM #39
Rainmaker
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Susan Laxson CRS
Palm Properties International - Naples, FL
Local Knowledge & Global Network

Oh Mike, what a great post and analogy and I see it played out every day in so many moves and with so many different kinds of music.  Thanks for a wonderful read!

May 25, 2016 07:31 AM #40
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Bob Crane
Woodland Management Service - Stevens Point, WI
Forestland Experts! 715-204-9671

Ah Yes, the all important dance Mike, important not to step on your partners toes during this dance.

May 26, 2016 01:35 PM #41
Rainmaker
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Jan Green
HomeSmart Elite Group,Scottsdale, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Keeping emotions out of real estate is also critical to keeping a sale together, sometimes feels more like a tango, too!  Great analogy and awesome post!

Jun 07, 2016 01:37 PM #42
Rainmaker
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Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Mike well said keeping emotions out and converting them to money is the answer.... "I will not let the seller rent back for a month...that is my house.." how about maybe if you pay $5k  what is the difference...? Endre

Jun 14, 2016 04:08 PM #43
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Praful Thakkar
Keller Williams Realty - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Revisiting - from a reblog.

Yep, ego is one of the main reasons some negotiation do not see the end of the tunnel.

Aug 16, 2016 04:05 PM #44
Rainmaker
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Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
"Franklin MA Homes"

Good morning Mike Cooper another great post.... when I first saw this on a reblog by Winston Heverly  it reminded me of Michael Jacobs famous saying: list, sell, rinse and repeat.... 

Aug 16, 2016 08:39 PM #45
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