13 Mar Three Pro-Negotiating Tips That Will Keep Any Real Estate Deal Alive
There’s nothing worse than investing your time and energy into a deal only to watch it all go up in flames. It’s especially frustrating when you know you could have gotten the deal closed if only someone would have been flexible, even a tiny bit. Instead both sides stayed miles apart, refusing to budge. The buyer won’t raise her offer and the seller won’t drop his and it feels like there is nothing else you can do. I call this the standoff. The standoff is a terrible, dark place where deals (and the egos of brokers) go to die a painful death. Brokers can lose valued clients, and clients can lose out on their dream home. But a standoff doesn’t have to represent the end of a deal.
My team members come to me for advice when facing a standoff more than any other time. It’s a difficult place to be during any sale, but years of practice and experience have shown me that it’s possible to end a standoff and close a deal that everyone is happy with. Negotiating is a craft. Negotiating isn’t about forcing people to see things your way and do whatever you want. Negotiating is about bringing hope to a difficult situation and ending in a place that is mutually beneficial for all. Getting people to see your point of view and guiding them into making different decisions is one of the best skills you can have as a realtor. I have faced more standoffs than I can count. But as I’ve moved along in my career, I’ve learned a few things that can keep negotiations moving forward and bring back deals from the verge of death.
Never forget that you are working with humans. You’re not just working with apartments and houses – you’re working with people. They’re coming to the table with different experiences, emotions and expectations. What got my last client to raise his offer will not necessarily be the answer for the next guy. Push the numbers aside for a minute and focus on the person. Think about what’s motivating them? How are they perceiving the situation?
For example, I was faced with a standoff just recently. The asking price on the apartment I was selling was $10.8 million. An offer came in for $8 million. Okay, that’s a $2.8-million—or 25%–difference, and that’s a lot. Based on those numbers I knew it was likely that the seller’s response would be: “NO way.” And the buyer is just as likely to say: “That’s my offer. Take it or leave it.” It’s like a chess match stalemate. When faced with this situation, there are three concepts that can be used to coax people out of a standoff and into the deal zone:
- Price: I know I just said to forget about the numbers and focus on the person! I’m asking you to think about what the price represents to the buyer and seller. The price represents making money or losing money. In this case, even though the offer coming in wasn’t ideal – I knew the legacy price of the apartment and I knew my seller was still making money. What does the price represent in the deal you are currently working on? Making money (just not as much)? Breaking even (that’s actually NOT losing money)? Or losing money (but not as much as they could lose)?
- Pressure: No one wants to lose out on an offer or a great deal on a new home. Apply pressure to clarify the situation for your client. In a standoff, gently remind a buyer or seller that no one can predict the direction a market is going to go so it does not make sense to try to time the market. A buyer should snap up the apartment they want before it gets more expensive. A seller should focus on the offer right in front of them, not some fantasy higher offer. What does fear represent in the deal you’re working on right now?
- Persistence: Let the information soak in. Then repeat it, frequently. Follow up and follow up with meaning. Send comps that support your argument. Check in and remind them the offer or house won’t be available forever. Reiterate the positives – it’s a fantastic house, it’s exactly what you’ve looking for! Or you’ve still made a great return on your investment with this offer! What is the message you need to get across persistently to your client right now?
The $8 million standoff ended once everyone understood the value of moving forward and making the deal work, the seller was willing to go to their minimum and the buyer their maximum price point. Focusing on price, pressure and persistence got everyone into that happy place where deals are closed, brokers make a commission, sellers make a profit and buyers have no remorse. The next time you’re in standoff, don’t assume it’s going to end with the death of what could have been a really awesome deal.
You’ll soon see that the dreaded standoff is just part of the selling process. It’s something you can anticipate and conquer, leaving the pain and frustration of dead deals behind you forever.