Wow! I can't believe you got away with that! OR They said yes to everything we asked for??? These are the words that happy clients say to their Realtor when they realize that he or she just exceeded their expectations. I enjoy hearing comments like that and I constantly work to improve my game with every transaction.
For years, real estate agents were viewed almost as highly paid tour guides and they held on to the information on homes for sale like it was gold. And, well... maybe it was. But with the rise in the popularity of the Internet and the ability for average people to access information on what's for sale, agents have had to hone their craft and focus on other ways to add value to the transaction. I for one, think this is great because real estate transactions are complicated and consumers need someone in their corner fighting for them and making sure their interests are protected.
Which brings me to negotiations. One of the many reasons that you should use a Realtor is that we are expert negotiators (a lot of us are anyway). Let's take a look at the skills that an ideal agent and negotiator has that can mean thousands more in your pocket or even the difference between completing the transaction or having to walk away.
Preparing for the Negotiation
There are many opportunities for negotiation throughout the transaction, although most people think of the negotiation at the beginning as being the big one. That's not always so because things brought to light during the inspection period are cause for negotiation either as a request for repairs or possibly a reduction in price/credit for closing costs.
A good negotiator prepares in advance by knowing as much as possible about the other party. There is a lot of information that is available in terms of public records, how much a person owes on a home, etc. However, there is also very valuable information to be gained by speaking to the other party's real estate agent. In the course of casual conversation I have had many agents reveal items that were pure gold when I went to begin negotiations on behalf of my client later. On the other hand, I have found that revealing certain tidbits in my conversation about my clients can be quite helpful. The trick is to be very conscious of the picture I am creating of my client by revealing only certain details. If these are sensitive details, I get permission from my clients ahead of time and discuss how revealing them might hurt/help their position. Even non-sensitive details must be revealed very sparingly and I am surprised at how many agents seem to talk just to hear themselves talk and end up damaging their client's negotiating position.
Who are you Playing To?
With real estate transactions I am not usually talking to the person who is the decision-maker. Instead, I am speaking to that person's agent. That agent has a position as a trusted advisor to the decision-maker. Therefore, convincing him or her that something should be done or is in the best interest of the transaction is vital to having that information conveyed convincingly to the decision-maker. There is an interesting dynamic here because the agent, while not the decision-maker, has a definite financial stake in bringing the transaction to a successful close.
Often my clients give me a lot of information about why they want what we're asking for. That is very useful and I usually find their reasons to be quite valid. However, my job is to pick out the points that the other party will find most valid. This is the same tactic used by an attorney when he or she restates what the client has said but in a way that is very convincing to the judge or jury. She may not focus in on every detail that the client has revealed but only uses the very best to accomplish her purpose.
During the Negotiation
Even though everything in real estate is put into writing, the actual conversation that I have with the agent ahead of time is of extreme importance. It gives me a chance to let them know what we will be asking for and allow them to think it over. It also gives me the opportunity to give reasons for my clients' position and to expound upon the ways that this will benefit their client. It is of extreme importance to also do a lot of listening during this phase because I need to know what the thoughts/desires of the other party are so that I can craft a solution that is equitable to both parties. Sometimes giving in on one small detail will net my clients concessions that are worth thousands so listening is vital.
Giving in a Negotiation
There are times when giving in a negotiation actually produces a win. For example, a seller may agree to a couple hundred dollars worth of work in order to keep a transaction alive. Since the seller nets a lot more with a completed transaction, this is an obvious win. Or a buyer may forego repairs in order to get a credit for closing costs. Suppose this buyer has a business that specializes in those types of repairs? The closing costs are then worth more to him than having the actual repairs performed. Therefore it is a win for the buyer and the seller has avoided the time consuming process of finding qualified contractors and getting repairs done prior to close of escrow. Another win-win.
Winning at Negotiating
A negotiation is only a true win when everyone feels that he or she has gotten a good deal. There are times when a real estate transaction produces a loss for one party (such as in a short sale). However, helping that party to mitigate that loss transforms it into a win. An expert negotiator will look for ways to find benefit for all parties and that benefit does not always have to be financial.
Who do you have negotiating on your behalf?
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