How To Negotiate in Real Estate Without Being Sleazy (Part 2)
In Part 2 of this episode, Jennifer shares how to effectively deal with all types of people in negotiations and some Do’s and Dont’s when negotiating in real estate.
Hello hello, I’m your host Jen Percival and welcome to the Women Rocking Real Estate podcast. I am all about maximizing your time so let’s get right down to it. You are listening to Part 2 of How to Be a More Effective Negotiator in real estate with both your clients and when dealing with other agents, while still being authentic to who you are. And That often means not using sleazy cheesy tactics and scripts. Well, I’m here to tell you that you absolutely can be a really good negotiator and you can do it while still being a normal, classy human being.
Ok just to quickly recap what we chatted about last week. If you haven’t listened to that episode, you should go back and do that first, because it really sets the foundation of negotiating and today’s tips won’t be nearly as effective without that super important foundation. Just to review from a high level though,
Tip #1 – The more prepared you are, the more successful you’ll be.
Was 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. Being prepared means really understanding your clients’ priorities and areas of potential compromise, it means using some detective work and seeing if you can uncover the seller’s drivers and motivations and lastly it’s to prepare your clients in advance about what to expect and to coach them about how they can best handle the offer negotiation process. Real estate negotiations don’t tend to produce super 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.
Tip #2 – Build your reputation before you negotiate
Was to build your reputation before you negotiate. You first have to develop a reputation with your clients that you have opinions and you are able to convey them confidently. Your clients 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’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.
You also need to develop a reputation with other agents. You want to be an agent that is collaborative and responsive, one that is upfront and transparent, but you don’t want to have a reputation of not having confidence or being a pushover. So be intentional around creating the reputation you want to have.
Tip #3 – Learn the art of persuasion.
Was to learn the art of persuasion and to ethically use the universal shortcuts that help people make decisions. Those shortcuts were Reciprocity, Scarcity, Authority, Consistency, Liking, and Consensus.
Alright moving along. Last week’s tips were more about the work we can do in advance of negotiating to give us a head start so to speak and set us up for success. In today’s episode, I’m going to kind of shift gears and focus more on what we can do in the moment of actual negotiations to make us more effective.
Tip #4 – Know Who You’re Dealing With & Adjust Accordingly
Now there are lots of different schools of thought about effective negotiating out there, but one that really resonated with me is the book Never Split the Difference by former FBI hostage negotiator Chris Voss – thankfully that’s an easy name to pronounce. In it he explains that there are 3 basic types of negotiators that you will come across in your real estate deals: There is the assertive the analyst and the accommodator. Each type of negotiator has different approaches, interpretations, strengths, and weaknesses.
The more you understand about who you tend to resemble the most and who you’re negotiating with, the more effective you’ll be.
So the first type is The Assertive. This is the type of person that needs to be heard. They’re kind of the type that tends to dominate conversations and they often can’t hear you until they’ve been heard. They’ll tend to talk over you. They get to the point and want things done fast. They’re the least likely to engage in small talk because they find it frivolous. They’re busy and they’re proud of it.
One of the things we’re going to be talking about in this episode is the use of a well-known strategy of using silence as a negotiating tool. It can be super effective…IF you use it with the right type of negotiator and in the right way. If there is a Silence in the conversation when you’re dealing with an Assertive, it will be viewed as a chance for them to talk some more. They don’t think twice about filling the gap in conversation with more of what they think, what they want, and how they want it done, and sometimes they can talk themselves right into your hands. So using silence with an Assertive can be an effective approach.
Now Their strength is that they are decisive, candid, and straightforward. Their weakness is that sometimes they come across as harsh. Now after giving that less than flattering summary, I’m not really super proud to admit that I’m most definitely an Assertive.
So to deal with this type, your best bet is to first engage in reflective listening so that you can be heard. Be firm and respectful, but not defensive. If during the course of your negotiations, you give a strategic concession, articulate your expectation for reciprocity. Otherwise, they’ll just take your concession and you might get nothing back.
Ok, the next type of negotiator is the analyst and they are the type who needs to avoid mistakes. They tend to spend hours preparing for a fifteen-minute conversation because they hate mistakes and surprises. They want to take as long as it takes to be fully prepared so they can get it done right. If there is Silence during a conversation they view it as a chance to think and you will likely be met with more silence. Every time there’s a gap in conversation, their wheels are turning, their minds probing and digging deeper. They like to think before they speak and because silence can be awkward, human nature can be to want to fill the void and start speaking, which isn’t always the best thing to do with an analyst. They are thorough, methodical and knowledgeable. They come to the negotiating table equipped with data, facts, and information. They listen attentively for new information because to them knowledge is power.
Now their weakness is that they’re so focused on analysis, they tend not to show emotion. They can be hard to read and can come across as cold or uncaring. They’re also skeptical by nature.
So to best deal with this type, come prepared with data, facts, and information. Be willing to share knowledge and have a data-driven conversation. Avoid surprises by warning them early of any issues that come up. This type of negotiator is also hypersensitive to reciprocity, so if you give a concession, they’ll likely return the favor in equal measure…or take their time to study the implications of your concession.
Alright, last up is the Accommodator who you’ve probably guessed, needs to be liked. They’re the type who focuses on creating harmony and goodwill above making decisions and getting things done. As long as they are bonding and building a relationship with you, time is well spent.
For them, interestingly Silence is a sign that someone is angry. When there is a gap in conversation, they’re the first ones to ask, “What’s wrong? Did I upset you? Sorry if I did.” They will often back down at the first sign of conflict.
Now their strength is that they are likable and charming. They’re friendly and easy to talk to. They’re experts at getting you to relax, laugh, and bond, which can get you on their side. Their weakness, however, is that they don’t always voice their objections. They may overpromise on things they can’t deliver. Sometimes they say yes to make you happy, but later you find out they really meant no.
To deal with this type, be friendly but remember that one of the persuasion shortcuts is being likable. So make sure you’re not falling into a situation where you’re conceding on things in a negotiation that you shouldn’t, just because you like the person and want them to like you back. Because that is human nature!
The Accommodator type is also likely to initiate a concession with the unspoken hope that you will reciprocate. Ask them open-ended questions and get them to articulate what they want, what they don’t want, and how you may work together to reach and implement an agreement.
So which archetype are you? We all have a tendency towards one, but most of us are a little bit of all three. To be a super-effective negotiator, it takes knowing your own tendencies and being very aware of them and then learning how and when to use these archetypes to influence people and build consensus towards a common goal. There is no right or wrong type, but it is helpful to know which type you’re negotiating with and how you can best influence the outcome.
The Dos and Don’ts
Alright next up, is not so much a tip but more the dos and don’ts of negotiating in real estate. Now full disclosure, most of these are just my two cents and not like researched, studied, and published facts on negotiating. They’re just my experience of what I’ve seen and tried that has worked and not worked!
Let’s start with some of the do’s
One of the most effective strategies I’ve used with clients when negotiating an offer is to give them an out. When people are backed into a corner, they feel pressured, and often that pressure can make them want to escape. When we remove that pressure it takes the air out of the balloon so to speak and allows them to think about things more rationally and less emotionally. So the next time you sense your client is feeling trapped or forced into making a quick decision, back away and intentionally give them an out. If it’s a buyer looking at offering on a home and you sense them hesitating, instead of giving them all the reasons they should offer on it, give them an out. Say something like “I’m sensing this is a really tough decision for you and sometimes that’s a sign to take a step back and re-evaluate. Maybe you’re just nervous which is natural, but maybe it’s not the right house for you?” Now if the idea of saying that made you panic thinking “but I may be talking them out of the house if I say that!” Yes. You may be talking them out of it. But if it’s truly not the right house, that is absolutely the right thing to do. Trust me, they will trust you so much more when you take this approach. You will have built so much loyalty with them and although they may not buy the house they’re contemplating, they will very likely buy another one. So giving people an out can be a very effective strategy to give people the space to make a decision without feeling pressured.
Another “Do” that I recommend comes into play if you’re dealing with another agent that’s an assjack. You know the type – they’re condescending and talk over you and are curt. You’ll actually come across these types of people in clients as well and it really comes down to a power struggle. They like to feel in control and to have more power and so they start every negotiation and sometimes interaction trying to gain the upper hand. The truth is, most of them are actually pretty insecure deep down, so they overcompensate and try to come off super confident. But it’s really just bravado. In my experience, there are a few strategies you can use to equalize the balance of power. And the sooner you equalize that power the better. These types of people can be pretty intimidating and the longer they go on, the harder it is to get the power back.
One subtle but pretty effective tactic is to use their name at the start of your sentence and to pause for a second after you say it. When done well it will tap into their insecurity and it will often get them to change their approach a bit. Not always but often. So for example, if it was another agent trying to convince you that your listing is overpriced you would say “Todd, I understand you don’t think the property is worth what it’s listed for, that might be your opinion, but the comps say otherwise.”
The second strategy for dealing with asshats is to mirror their behavior. As I said last week, I will always be pleasant at the start of all interactions, but if someone is being condescending to me, I will mirror their behavior right back. Often after a few minutes, it will snap them out of it and my experience has been that it has changed my relationship with them moving forward and I actually think it’s because they respect you more. If all else fails and you find yourself being intimidated and fumbling for words and not being able to get a word in edgewise, the best thing to do is just take things online. Stop talking to them and only negotiate phone email and text. They lose all their leverage and you can carefully craft your responses without getting caught up being on the fly.
Another Do when trying to persuade someone who is not seeing things eye to eye with you, is to summarize their point of view so that they specifically respond with “that’s right”. This is actually another strategy from the book that never split the difference and it’s super effective. You’re not getting them to say you’re right, just that’s right. When they say that’s right they feel empathy from you, they feel understood and they will be much more likely to want to collaborate with you. So summarize where they’re coming from and end it with ‘is that right?’
Another really important do is to be a creative problem solver. Things always go wrong in real estate and the biggest stuff always seems to happen between someone purchasing a home and closing. I’ve had some doozies. I had one client’s house burn down 4 days before closing, I had a tree fall on a house just before closing, I’ve had an indoor swimming pool overflow on the day of closing, I’ve had basements flood and I’ve had deals fall through the day before closing.
Stuff is always going to go wrong and you can be one of two types of people. Those that make the problem worse and those that make the problem better. Be the latter ladies. Before you do anything, calm yourself, stay cool, and stay collected. Actually, sit down and think through how you can make the problem worse and how you can make it better and then focus on being a calm creative problem solver. The more you panic, the more your clients will panic. Now I will preface that with you need to convey that there is a sense of urgency and that you’re in control, but you don’t want to go into full-fledged freak out mode. Just calmly take control. So don’t take issues and turn them into nightmares. Be the agent that takes legitimate huge problems who easily and creatively finds solutions.
Alright, moving along to some of the don’ts.
One of my biggest pet peeves is something that Fredrick on million dollars listing new york does and I’ve seen guys try to do it too and it’s so belittling. If you’ve got a crap offer, don’t try to position it as a good offer. It just sets the person receiving the news to have wrong expectations and then to be drastically let down. I do the total opposite. If someone has put in a low ball offer on one of my listings, when I call my client I immediately say “Ok we’ve got an offer but it’s total crap” and then when I tell them what it is, they’re often like “oh it’s not great but maybe we can work with it?” It’s all about setting expectations and I believe you’ll get further using this approach than Fredricks. Now in fairness Fredrick has done a little bit better than I have in real estate, so who am I to criticize his tactics and full disclosure I do find him highly entertaining and endearing.
Ok, another big don’t that I want to mention is specifically when you’re negotiating a lower price on a listing on behalf of a buyer. In my opinion, you should never negotiate by trying to convince the seller their house is shit and not worth what they’re asking. Think about how that would make you feel? You’d just get defensive and want to dig your heels in and try to convince them it is a great house. It’s a lose-lose in my opinion and rarely works. Instead, use the budget as your negotiating tool. Tell them your clients love the house, but that it’s listed at the top of their budget. You can’t argue with that. Then use other levers like closing date, terms, deposit, etc, to compromise on and show you’re trying to make it a win-win.
Another Don’t in my opinion is treating the other agent as an enemy. You don’t have to GO to battle to be a great facilitator. You both have a common goal and there’s no need to be adversarial. Yes of course you need to represent your client’s best interests but work WITH the cooperating agent, not against.
Alight the last big don’t I want to share was kind of the whole purpose of this episode and that was how to be a great negotiator and still be authentic to who you are. So if you’re not cheesy, don’t you cheesy tactics. Just because someone has given you a script to use when trying to ‘close’ someone, doesn’t mean you should use it. And just because it may have worked for someone else, doesn’t mean it will work for you. You need to be yourself. You can learn to be the best version of you, but be you. Make things your own, stretch, and grow your skills for sure, but don’t do things that aren’t aligned with your values and don’t align with who you are or how you want to be perceived.
Ok before I let you go, I have one big favour to ask. As you know, I am passionate about empowering and supporting women in business and obviously women in real estate. So last week I got this email from one of the podcast platforms and it was promoting real estate podcasts in North America. There were 10 podcasts featured and do you think one of them was hosted by a woman? Nope. They were all hosted by men. And that makes me angry. I’m sorry we have voices to share too and I want to make that list. I want more women to be able to hear from other women in real estate and so I need your help. I’d really love for you to rate it and share a quick review if you’re enjoying it obviously. It’s only through good ratings and reviews that it will get more exposure on iTunes.
Alright, That’s it for today ladies, I really hope you enjoyed these episodes and it gave you some ideas about how you might handle situations you come across in the future.
Remember the more you learn, the more you’ll earn.
Until next time….