THE ART OF NEGOTIATING

The Art of Negotiating

From the very first time I speak with another agent, although they may not realize it, I've already begun negotiating for my client.

The area of negotiating is probably the single most important trait of defining a great real estate agent, but also the most often overlooked. Thousands of dollars can be won or lost in the negotiations process and an inexperienced or talkative real estate agent can inadvertently say the wrong thing to the wrong person and "tip the scales" in the other persons favor.  

Below are some excerpts of actual statements that other real estate agents have said to me:

• "My clients are getting divorced and really need to sell this house."
• "The builder has several homes almost finished and he's screaming at us to get them sold right now"
• After showing a particular home to one of my buyers, the listing agent called me to say, "I was calling to see if your clients will be making an offer this week. If not, we're going to lower the price by $5,000 next week."

These statements make for great dinner conversation, but it's actually quite frightening to think there are agents out there saying these things. A friend of mine told me once, "If I ever found out that my real estate agent had said something like this, I'd fire him on the spot."  The problem is most sellers will never know their agent is costing them thousands of dollars.

For me, the negotiating process begins with our first conversation. Typically I'll start by being overly friendly to the opposing agent and thanking them for their help. It's been my experience that playing to the other agent's ego will typically produce the best results. After I feel their guard is let down (because they believe I'm their friend in this transaction) I'll ask a few questions.

If I'm the listing agent, I'll ask them, "How many homes have you shown this client? What do they seem to like about this home? Is there anything they don't like?" These seemingly innocent questions can elicit responses such as, "Oh I've shown them at least 20 homes and they just haven't found anything they like as much as your listing". Or "They just absolutely adore this home and it's exactly what they're looking for. They love everything about it."

When working on the buyers agent side I'll say things like, "Where are the sellers moving to after they sell this home? Do they already have another home picked out? How motivated are they to sell right now?" Again, I'm sure you would assume the listing agent would surely see through this, but when presented in a casual, unassuming atmosphere they will typically give responses like, "Oh they have a beautiful new home all picked out and they're just dying to get moved into it." One of my favorite responses to this line of questioning was from an agent I worked with last year. She explained to me, "They are VERY motivated and just between you and I, they'd be willing to take much less than the asking price". As if that comment wasn't enough, their agent then proceeded to tell me how they don't really need the refrigerator or the washer and dryer because they've already bought appliances for the new home. We intended to make an offer anyway, but as you can imagine, my buyers offer was not at their full asking price.

One other point I'd like to bring up here for home sellers. It would stand to reason that in a perfect world your home would be absolutely flawless when you put it on the market. It would have fresh paint, trimmed landscaping, new carpet, and all the little minor things would be repaired and/or replaced. It simply amazes me how many agents don't have this discussion with their sellers. The problem is that buyers in this market don't think in terms of hundreds, they think in thousands.  What I mean by this is if you have something to fix in the home that might cost you hundreds of dollars to fix, buyers will want to discount this repair by thousands of dollars when they're making an offer. Don't give them this opportunity to use anything as a negotiation tool.  Fix it now before putting your home on the market.

I suppose I can't entirely blame the agents because for the most part, they don't know any better. As far as I can tell, not one single real estate brokerage offers a class on negotiations and it's typically not something that we learn in high school either. Most experienced negotiators will tell you they got that way through years of experience or for some of them, it just comes naturally. For me it's a little mixture of common sense and just knowing when to keep my mouth shut.

Most people in sales are a "high I" personality. Basically that means they get excited and love to talk, so keeping their mouth shut is a major stumbling block. I like to talk, but I've learned it's critical to not "spill your candy in the lobby" so I've trained myself to listen to that little voice in my head that says, "QUIET, let the other guy talk and you just might learn something!"