How Refined Are Your Negotiating Skills?
One of the most important skills every real estate agent needs to have is the ability to negotiate a successful sale. Keeping a sale on track and negotiating a final price, though, only looks easy after the fact. Whether you represent the buyer or the seller, those final weeks prior to closing can be contentious.
A Position of Strength
Market conditions play a key role in determining who has the upper hand in a negotiation. But, regardless of whether it’s a buyer’s or seller’s market, a proper negotiation should be a win for everyone involved. When negotiations fail to provide a win for their client, it’s the agent’s responsibility to make sure the client understands the circumstances in order to make an informed decision — walk away or find a way to compromise.
For example, in a seller’s market where inventories are low and potential buyers are bidding above the asking price, your buyer needs to know that they may not get the mortgage loan they’ve applied for if the appraisal comes in lower than the price they’ve agreed to pay. Sometimes, no matter how badly you may want something, getting it isn’t always the best result. In this instance it would probably best to walk away.
Prior to Negotiating
- Be prepared. Work with your client to build a strategy. If you’re buying, determine a price range and an initial offer. If you’re selling, decide how flexible you want to be with your price. Your goal in either case should be clear to you and your client going in.
- Remain flexible. Just keep in mind that the appraisal, home inspection, title search, etc. may raise unexpected issues — some that may be advantageous to your negotiations.
- Make the first move. Buyers should be pre-approved — or better yet, Approved to Move — and ready to start negotiations right away. This is particularly true in a tight market.
- Be ready to respond. Both buyers and sellers should be ready with a counter offer. If you’re not prepared to make a specific offer, request additional time and respond ASAP.
- Listen and watch. Don’t be blinded by your strategy. A good negotiation is fluid. If you’re too focused on the end state you’re liable to miss a critical word or gesture that would give you the insight and guidance you need to make your next move.
- Don’t overuse contingencies. Filling your purchase and sales with a lot of contingencies is not a good strategy. Select the one that concerns your buyer the most. For example, the buyer loves the house but has concerns that there may be some serious structural issues. In this case, the offer is contingent on the home inspection. If the buyer insists on listing a number of contingencies, they’ll need to understand that their chances of ultimately closing the deal may be seriously diminished should another offer with less contingencies comes through.
- Compromise. Buying or selling a home should not result in winners and losers. Compromising on price to cover the costs of repairs makes sense and can be a convenient resolution for a seller who needs to move quickly. Conversely, a seller who makes the sale of their home contingent on the purchase of a new home, would welcome a buyer who is renting and willing to wait.
The Bottom Line
A key piece of the negotiating process for a real estate agent in a home purchase is managing expectations. Agents for both the buyer and seller should be willing to share the concerns and demands of their clients. After all, sellers want to sell and buyers want to buy. If the buyer really wants the home in question, the agents should find a compromise that works for both parties. Of course, both should also remind their clients that “it ain’t over ’til it’s over.” There is always the possibility that a sale could go south.
Negotiating is considered an “art.” How refined are your negotiating skills?