The new rules of negotiating
Negotiating is not relaying information between two parties.
That’s order taking. And it’s usually only about price. That’s bargaining (more on this later).
Do you want to start telling your clients you’re a professional bargainer?
If you answered no, keep reading.
Here’s a few rules that you can apply today and will immediately improve your negotiations.
Make the first move
It took me a long time to realise that you must always start the process. Whoever controls the start of the negotiation controls where it ends.
This starts from the moment you first meet any potential client. It doesn’t matter if they’re a buyer, seller, landlord or tenant.
If you let the other party start negotiations, you’ve given up control. Often without even realising it.
For instance, when you ask a buyer what their budget is, you are allowing them to start the negotiations. Now you’re left with very little choice other than spending your time chasing that number rather than finding the best solution for them.
Imagine now if when you’re first getting to know a buyer, instead of asking “What’s your budget?” like your competitors are, you say “I’ve got something for you to see so you can tell me how close it is to what you want”. Match (and negotiate) on requirements, not budget.
If you’re speaking to a seller, so many agents will ask “what do you think your home is worth”. All you’re doing here is anchoring their expectations. Instead, control the process. “Before we discuss a sensible price, let’s run through the market together” and highlight the live and sold comparables.
“Do you want to buy it?”
How many agents don’t ask if a buyer or a tenant wants to make an offer? It’s the most important question you can ask for your clients (remember who you are serving). It’s a question that has no wrong answer. You’ll either get an offer, or you’ll get the feedback you need to align the asking price to the market.
Always make the first move.
Understanding is the key
What I mean here is always play dumb.
Even if you have all the answers, ask all the questions. It’s important to remember that what you do every day, most people go through three or four, times in their lives.
Your knowledge and experience is not something to be take for granted and it is not something to offer without context and understanding.
You need to play detective. So you can match your experience to your clients’ problems.
Always remember this, people buy houses to solve a problem. You can’t sell them anything if you don’t know what that problem is. And you can’t negotiate on anything other than price if you don’t know what their problems are.
When you come across as the know-it-all agent, the person with all the answers already, their defensive walls go up. But if you do your best to understand their situation then the opposite happens and people start listening to what you have to offer.
Remember that people will always make decisions for themselves. By asking question after question you’re doing two things which will improve your negotiations. You’ll show them that you care enough to listen and by understanding their problems, you’ll get their permission to give advice.
Without that permission, you’re just another arrogant estate agent. Understanding is the key to every single negotiation.
Scrap the idea that negotiating is about working on price. A lower price does not make for a better deal; it only makes for less margin for you and your company for everything else that will come up along the way.
Going back and forth on price alone is bargaining. We’ve heard stories about agents driving back and forth between parties long into the night to “get the deal done”. All these agents are doing is taking orders and delivering them to the other side. They’re a messenger, they’re a bargainer, they are not a negotiator.
If you find yourself in a bargaining situation, that is going back and forth around price, reset the process by asking these questions:
- “It sounds like you’ve got second thoughts.”
- “It looks like the value isn’t there for you.”
- “It feels like we need to change things here.”
Don’t bargain, reset and refocus, ask more questions and listen for the real deal breakers.
Always have an out
Tom Panos calls not having an out commission breath. People can smell when you’re desperate for the deal. Remember that you can always say no.
In fact, no is the most important word in a negotiation. It gives you so much power. It gives you so much respect from all parties.
It’s your job as a professional negotiator to remember you can walk away. It doesn’t matter if you’re walking away from a seller who only wants a cheap agent. Or if you’re walking away from a buyer who’s throwing around a low offer because they’ve misread the market. You can always say no and move on.
Even if your pipeline is empty and you’re unsure of where your next deal will come from, saying no is better than taking on bad business.
Price comes last
The single biggest mistake you can make in a negotiation is talking about price first. To have an honest conversation around price, people need to feel comfortable.
What buyer is going to be honest with an agent if the first question they ask is “how much?”.
The best thing you can do to control the negotiation and instill comfort and confidence is get everything on the table before you talk price.
- Full names
- Solicitor details
- Broker details
- Deposit details
- Conditions of the offer
- Preferred exchange date
- Preferred completion date.
Be open and friendly and find out what they want for the above. Once you’ve got everything down (always in writing), only then discuss price.
If you can understand their expectations for everything outside of price, it gives you so much more leverage in the negotiation.
The same applies to your clients at the time of instruction. Talk process around method and marketing (even your own fees) before you get to price. This will give you so much more context in which to discuss price.
Finish kind, not strong
How many times has the end of a negotiation been so different from the start. First impressions matter but the last impression is the lasting impression.
Most people save their cheap shots for last. Conversations ending like “well if you won’t come up then we may as well not worry about it”. Or “this is the best offer you’re going to get, you’d be a poor fool not to take it” (literally the words spoken to my Mum and the reason I got into property).
Don’t burn a bridge if a negotiation is successful at conversation one (they never are), or if it the result doesn’t turn out to be an agreement.
Always end every interaction throughout any negotiation with kindness and empathy. Leave the other side with something positive, no matter how it ends.
“I’d love for us to be able to work through this together so we can have a long and prosperous relationship. Thank you”.
Make them understand that you care. You did it at the start, do it at the end.
Bringing it all together...
The key to better negotiations lies in making sure you make the other party feel respected and well treated at all times, and especially at the end.
If you can show you care then you’ll help people become more comfortable in the negotiation and you’ll create an atmosphere where it isn’t just about price and you negotiate a good deal for all parties.