Negotiation is an art form. Some people are born with the ability to negotiate like a pro, while others must learn and practice their skills to keep it sharp. Either way, negotiation plays a big role in real estate dealings. Whether you’re an agent, investor, or homeowner, you need to be able and willing to negotiate to get the best deal. Negotiation isn’t for the faint of heart, so here are several strategies to help you become a better negotiator in the real estate industry.
1. Include an Escalation Clause
An escalation clause makes your offer more competitive. It lets others know you’re willing to pay so much above the highest bid up to a specific amount. With an escalation clause, you’re playing to win.
2. Let Them Think They’re Saying Yes on Their Terms
No one likes to be coerced or pushed into something, so a good negotiation tactic is to make the other party think they’re saying yes on their terms. The easiest way to do this is to give them an easy out. Use affirming language like, “You’ll probably refuse, but…” to increase the compliance of the other side.
3. Take a Win/Win Approach
Real estate transactions don’t have to be adversarial. Many people make the mistake of approaching these transactions like they’re going into battle. This rarely accomplishes anything positive and only serves to tick off the other party.
Instead, approach everything from a win/win perspective where you focus on solutions instead of problems.
4. Learn How to Persuade
Persuasion, like negotiation, isn’t always an innate skill. Sometimes, you need to learn and practice it to make it work for you. Here are the 6 rudiments of persuasion.
- Reciprocity – people are more likely to give when they receive something
- Scarcity – if something is scarce, it pushes people to panic and act quickly
- Authority – people are more inclined to act when suggestions come from a perceived authoritative figure.
- Consistency – people are more comfortable in consistent situations
- Liking – people respond positively to others they perceive to be like themselves.
- Consensus – photos that are pinned repeatedly on Pinterest will help a home sell faster. Further, others will gravitate to and want to work with someone with a good reputation.
5. Do Your Homework
In real estate, location is key. In negotiations, data is key. When negotiating with others, you need to know more than they do. It pays to gather as much data as possible and use it to your advantage to get the best deal possible.
6. Negotiate Over the Phone First
In the beginning stages of negotiation, there’s a lot of back and forth, with many counter-offers coming in. it’s a good idea to jot down the main aspects of the deal while you discuss them over the phone, but don’t commit anything to an actual document right away because too many papers with varying price points can become chaotic and hard to keep track of.