5 Negotiating Tactics

I was speaking with one of my clients this week about an offer we received on their house.  As usual it was a lowball offer and they were very upset. I told them not to worry because I've been through this a hundred times and you simply have to go through the motions to find out what's most important to all the parties involved.  After an afternoon of batting offers back and forth, we came to an agreement that was a win-win for everyone.

As I slid the counter-offer in front of my client to get his signature, he looked up at me and made the comment, "I guess they teach all you agents how to negotiate when you're learning how to become a real estate agent."

I explained to him that the skills of negotiating was something that I had to learn on my own and that I read a lot of books, listen to tapes, and constantly pick up little tips from other agents.  He was quite surprised to hear this and commented, "That's scary. I would assume the negotiations are one of the most critical reasons to hire a real estate agent and you're telling me no one teaches you how to do it?"

I've written other articles about negotiating, but I think my clients point is well taken.  It is one of the most important reasons for hiring an agent, yet no one teaches us how to do it properly.  This is why I think it's worth writing about some of the ways I choose to negotiate for my clients.

1. The Silent Treatment.  Silence makes most people uncomfortable. Also, almost all real estate agents are very outgoing "High I" personalities.  They LOVE to talk, so if you simply keep your mouth shut and listen, you might be surprised at what you'll find out.  The longer you go without saying anything, the uneasier the other person will become. Eventually he or she will say something just to break the silence. The response will often be unguarded and give you valuable information.

2. Yes or No Answers.  The trick to negotiating is getting more information. Typically the person that knows the most information has the biggest advantage. When asked a question, I try to keep my answers short and sweet, preferably yes or no answers. When I'm asking the other agent questions, they're usually open ended questions that require a longer response.  Simply put, the more you talk, the likelier you are to spill some important information.

3. The Reverse. One of the easiest things to do is simply answer a question when someone asks you. It's hard not to answer the question because that's how we're taught to do it, but one seamingly innocent question can later come back to bite you if you give them too much information. Learning to use a "reverse question" can be a hugh benefit to both you and your client. 

Here's an example. The buyers agent asks you if the seller is prepared to move out quickly. Sounds like a harmless question so you excitedly say, "They sure can. They have another house all picked out and are afraid they're going to lose it.  Right now would be a perfect time for an offer." Then the buyers agent says, "My buyers actually have plenty of time but I simply wanted to know what the sellers situation was, just in case". That's when you realize you gave away too much information. Now your sellers may appear to be highly motivated for a quicker sale.

A better strategy would have been to use a reverse question. It might sound something like, "Is this important to your buyers that we close quickly?"  This puts it back on the other agent to answer the question and helps to uncover the REAL reason for this line of questioning.

3. The Deadline. Deadlines keep situations under control and help to motivate someone to react quicker than they would prefer. Use shorter-term deadlines, such as setting a date when an offer will expire, to motivate people to take decisive action. This doesn't always mean the physical date you put on the contract, it can sometimes be a verbal date or a timeline.

When working with a buyer in this market, I will sometimes tell the listing agent that "We're going to be submitting an offer, but we'll need a quick response from the sellers because this buyer needs to get into a house quickly.  If we're not able to come to an agreement on this house, then I'll need to find them another one."  This tacktic works very well by putting the sellers under pressure and also lets them know their home is certainly not the only home on the market. It also puts the listing agent under pressure to suggest they get this buyer under contract before they lose them.

4. The Competition. Mentioning the competition is a good way to keep the other side from feeling too secure. If you represent the buyer, remind the listing agent and the seller that the buyer also liked several properties in addition to theirs. If you are the listing salesperson, hint that another offer may be on the way. Don't lie, but don't miss the opportunity to use the competition to your advantage.

5. Prepare to Walk Away. Preparing to walk away from the negotiation can get dramatic results when the other party is being noncommittal, or refusing to make a counteroffer. If the negotiation has reached a stalemate, start gathering your papers and packing your briefcase in a matter-of-fact manner. If you have read the situation correctly, the other party should quickly offer a constructive response. 

One last thing that I think is worth mentioning, Never EVER use the words - I, Me, or We when negotiating for your clients. Using these words or combinations thereof makes it sound like you're taking it personal. You should always say, "my clients" or "the sellers" or "the buyers".  You'll sound much more professional.