In Part 1 of this week’s episode, Jennifer shares tips and strategies on how to be a more effective negotiator in real estate with both clients and other agents, while still being authentic to who you are.
Hello and welcome to the Women Rocking Real Estate podcast, I’m your host Jen Percival and I really appreciate you tuning in this week to our second episode of Season 2. Alright, so any of you that listened to last week’s episode knows that I put out a survey asking you lovely ladies to let me know what you want to learn about most. And the number one topic that came up was negotiating, so that is what we are going to be talking about today.
When I sat down and thought about all the negotiation workshops and training I’ve taken, some that were great and some that made my skin crawl and all of the stuff I’ve seen and tried in real-life negotiations in real estate, I realized this was going to be really long if I tried to cram it all in one episode. I don’t know about you, but I have a limited attention span and when podcasts are much more than about 30 minutes or so, I kinda tune out. That’s the last thing I want you to do because this is such important stuff! So I’m breaking this topic up into a 2-part episode Release Date: Sept 15 Due Date For Review: Sept 14 Episode #: 30 Episode Season: 2 Episode Title: How To Negotiate in Real Estate Without Being Sleazy (Part 1) Episode Description: In Part 1 of this week’s episode, Jennifer shares tips and strategies on how to be a more effective negotiator in real estate with both clients and other agents, while still being authentic to who you are. Lead Magnet / Opt-in ? None Episode Transcript? Yes – See Below So this week and next I’ll be sharing key tips to become a more effective negotiator in your real estate career while still being authentic to who you are and that is the key. You will never be good at negotiating if you’re trying to use tactics and scripts that just aren’t who you are. It will come across as forced and people will know you are not comfortable – that will really hurt your leverage and you’ll end up not being very effective.
When I talk about negotiating in these episodes, we’re going to be chatting primarily about negotiating with your own clients in the process of buying and selling and with other agents during offer negotiations. We could chat about hundred of other scenarios, but we’d be here all day and I like to keep things relatively simple with some actionable things you can implement right away. We will save other scenarios for future podcast episodes. So let’s dive in.
TIP #1 – PREPARATION IS THE KEY
Tip number one is that the more prepared you are, the more successful you’ll be. The work that you do, before you get to any negotiation discussion will hugely impact the outcome and more importantly the perception of the outcome. Remember, perception is nine-tenths of reality. You want your clients perceiving that you were an effective negotiator and the first step is to set yourself up for success by doing the necessary prep work.
And that starts with knowing what is most important to your client. Now they will try to tell you everything is important and that they’re not willing to compromise on anything. But when push comes to shove, chances are they’re going to need to compromise on something. Your goal here is to find out what the lower hanging fruit is and to get a consensus that those would be levers they’d be willing to move on, if necessary. So I get clients to prioritize what is most important to least important on things like price, closing date, conditions, inclusions, financing terms, etc. Now I always preface this discussion that we’re talking within reason and I’ll often give them an example – would you be more willing to take an offer that’s $5000 less with a much quicker close or $5000 more with a longer close? The key here is to just start to get an understanding of what’s important to them.
When you know what is negotiable and what isn’t, it’ll make your job that much easier and you’ll come across as much more assertive in your negotiations….because you’re not bluffing.
The next way you need to prepare is to learn what is most important to the other negotiating party – ask questions of their agent, but don’t be obvious about what you’re doing or they will clam up instantly. I’ll often call a listing agent before preparing an offer and ask what’s most important to the seller. Is there an ideal closing date, what terms would make the offer more appealing, and why? You’ll be surprised by how much intel you can acquire about their motivations.
Next, you need to do a little detective work. Look at the property history, how long have they lived there? Is there any info you can find that would indicate their emotional drivers? Someone who has been in their home for 50 years is probably pretty emotionally attached to it and you’d use a completely different strategy with that seller than you would a contractor who bought the house a year ago to flip it and has 10 other properties he needs to unload. Knowledge is power and really effective negotiators don’t use one strategy or tactic. They are kinda like chameleons and adjust as needed.
Alright, the last preparation you need to do and this can often be the most effective is to prepare your clients for the negotiation process itself. You kind of need to warn them about what’s to come so that they are expecting it and it doesn’t take them by surprise. Real estate negotiations are more different than probably any other type of negotiation that you’ll encounter. There’s big financial stakes and often high emotions. Those two things combined do not create the most reasonable parties. So it is critical that you do everything you can to prepare your clients and get them in the right frame of mind.
This is the best time to share stories and examples of how some people in the past have reacted and the negative impact it had on the negotiations and ultimately the client. As soon as they are in that exact same position, they will remember your story and they will inherently not want to react or behave in the same way. Trust me, this is a really effective strategy. I also use it with buyers who are frustrated by something a seller is doing. I’ll use that as an opportunity to say “okay so you’ll remember this when it comes time to sell your house right? You’re not going to do this right?” You’re getting buy-in and agreement on how they will behave in the future and when that situation comes up, and if often does, they will remember and be much more reasonable.
One of the most important things you can do in a negotiation is to remove them from their position and be able to see the other party’s position. I try to be very intentional around making clients put themselves in the other party’s shoes. Even if they aren’t able to do it at the moment when the situation is reversed and they are the one selling or buying, they’ll remember your conversation and at least it will help you negotiate that deal!
So tip #1 is to be intentional around preparing your clients for negotiations and reminding them to remove emotions and to put themselves in the other party’s shoes. Don’t make them view the other party as an adversarial – try to get them to have some empathy. It will make your negotiation efforts so much smoother and more successful.
TIP # 2 – BUILD Your Reputation BEFORE Negotiation
Alright, moving along. Tip number two is to build your reputation before you negotiate. You will develop a reputation very quickly in this business and that reputation can work for or against you. You first have to develop a reputation with your clients. I think it’s really important that you demonstrate your tough side every now and then. You need to take a tough stance on some things, you need to have opinions and convey them confidently. You need to disagree with them sometimes and demonstrate your authority and value. Why? Because they need to have complete confidence that you won’t be pushed around and that you’ll negotiate the best possible deal for them. If you’re always agreeable, don’t share opinions, and never take a firm stance on things, they will subconsciously start forming an impression that you are not confident, and they will go into any negotiations worried that you aren’t up to the task. It will make them dig their heels on details because they’ll feel like you’re not negotiating on their behalf, so they need to make up for that and be completely inflexible.
On the flip side, when you’ve been intentional around demonstrating your authority and ability to confidently share your opinions, they will have subconsciously formed a belief that you’ve got this. They will go into negotiations so much more confident of your abilities and if you come back and tell them this is the best and final offer and they should take it, they’ll actually believe you and take your advice.
So be super intentional around building that reputation with your clients before you’re in a position where you’re negotiating. It will make your life so much easier and your deals so much more successful.
When it comes to negotiating with other agents, you will also quickly develop a reputation. For the most part, I say Be the agent that everyone wants to do deals with. Be easy-going, be responsive, be pleasant, be collaborative, be upfront, be transparent, and have integrity. When you are those things, you have already started paving the way to successful and smoother negotiations with agents you’ll do deals with in the future.
Now being friendly doesn’t mean you can’t be a tough negotiator. For me personally, about I’d say 90% of agents I’ve done deals with would say that I’m super easy to work with, but there’s about 10% who would say I am the biggest bitch they’ve ever met. I will never be the first one to be rude. I will always be super friendly with everyone I first meet, but I use a tactic called mirroring. If you’re a dick to me, I’m going to be a bigger dick to you. Like I said, I’ll always try being nice first, but if that doesn’t work quickly, I don’t let that balance of power shift in their favour for too long. I quickly course correct, set boundaries, and set the tone for how I’ll let you treat me. Because that’s really what it comes down to. If you’re going to be rude or condescending to me, I will not tolerate that. I don’t know, some people are able to always take the high pleasant path, but that’s just not me and I’m pretty unapologetic about it. My experience has also been that there are the usual suspects in every market – I’m sure you’ve got them in your market too, they’re just nasty, and being nice to them doesn’t work. They just view that as a weakness and will walk all over you.
You’re going to come across all types in your real estate deals and you need to be able to adjust your style when needed. Have a reputation of being great to work with, but also not a pushover.
Alright so tip number one was to do your prep work before entering any negotiation and tip number 2 was to build a reputation both with your clients and with other agents well before you’re needing to negotiate.
Up next, tip number three is to learn the art of persuasion
Tip #3 – Learn the Art of Persuasion
Through scientific studies, Dr, Robert Cialdini developed 6 universal shortcuts that guide human behavior and help people’s decision making. Understanding these shortcuts and employing them in an ethical manner can significantly increase the odds of someone being persuaded by you. Now I really need to emphasize using them in an ethical manner. So often I see agents manipulate people and use these tactics to their benefit and not the clients.
So grab a pen and paper and quickly jot these 6 universal laws down:
1. The first shortcut of persuasion is the Law of Reciprocity: Human beings have an inherent built in sense of obligation to give back, if we have been given something. Now you don’t ever want to give manipulatively to try and get something in return, that’s just wrong. However, you can still use reciprocity in genuine ways. The key is to Be the first to give and to make sure it’s personalized and unexpected.
2. The second shortcut is the law of Scarcity: People want what they can’t have and people are much more likely to move on something if there’s a chance it will go away. So in the context of negotiating on the purchase of a home, it’s not enough to point out the benefits of home to the client, you have to point out why it’s unique and what they stand to lose if they don’t compromise during negotiations. Again this is all predicated on the fact that it genuinely has to be the right home for them and that they’re just getting emotional during negotiations for example. So I’ll give you an example. I had clients that wanted to build a house in a neighbourhood they loved, but the lots were traditionally out of their budget. Well one house came up that was on a huge lot, but it backed onto a cemetery, so it was priced in their budget. After 3 days of offer negotiations, we got to $10,000 apart and both parties were unwilling to budge. Out of frustration, my clients decided to walk which was fine, but they needed to understand that they weren’t just walking away from that home, they were walking away from being able to live in that neighbourhood. They needed to understand that THAT was the decision they were actually making and as soon as they realized the implication of that, they quickly accepted the offer. It wasn’t about manipulating them, it was about making sure they understood what they had to lose and that is the law of scarcity that helps people make decisions.
3. Alright the 3rd shortcut is Authority: We are more likely to be persuaded if it is coming from a perceived authority or expert in the field. People follow the lead of credible, knowledgeable experts and that is why it is so essential that you’re constantly building authority with clients and with other agents that you will regularly encounter. What the science tells us is that It’s important to signal to others what makes you a credible, knowledgeable authority, BEFORE you ever make your influence attempt. So how do you build your authority? Well that’s a whole other podcast episode, but for now I want you to focus on being intentional around demonstrating that you are a credible and knowledgeable authority on all things real estate.
4. Number 4 is Consistency: People tend to gravitate toward, and feel more comfortable in situations and with people that are consistent over time. This is why I can’t stand hot and cold people. Like just be consistent. Either be nice to me all the time or be an asshat, but don’t flip flop. It’s so unsettling and I don’t know what to expect. It makes me highly uncomfortable.
5. Alright Number five is Liking: this isn’t really rocket science, but people are more likely to be persuaded by those that they like and studies have shown that there are 3 important factors that help influence whether someone likes us: we like people who are similar to us, we like people who pay us compliments and we like people who cooperate with us towards mutual goals. So to harness this powerful principle of liking, the next time you’re starting a negotiation with someone, start with a compliment. If it’s a listing agent, tell them what a great job they did with their staging or marketing. Make it genuine obviously but find something to compliment them on and then find areas of similarity and ways to cooperate with them before you get down to business and start trying to negotiate. You’re 6 times more likely to make a deal with someone you like.
6. Alright the last shortcut in the art of persuasion is Consensus: When people are feeling uncertain, they will look to the actions and behaviours of others to determine their own. So if you can point out how other similar people are doing something, you’ll be much more likely to persuade someone to do it as well. Likewise, if you have a reputation as a great agent to work with, more agents will want to work with you, and as a result, you’ll gain leverage in future negotiations. Okay so just to recap the 6 shortcuts to persuading people, you can use: reciprocity, scarcity, authority, consistency, liking, and consensus.
Alright, so that is it for Part One of this episode. Join me next week and will be sharing more tips about effective strategies for negotiating in real estate and some of the most important do’s and don’ts.
Remember, the more you learn the more you’ll earn.
Until next time!