Be aware that there is a frequent response to this type of offer. The counterpart will take the best of both choices. In the example, it is not unusual for the counterpart to come back saying they want the price of $208,000 with the sale including the playhouse, washer, dryer and refrigerator. So, if you are looking to close negotiations, give your counterpart a Package Option, but be sure you will be happy if they take the best of both choices. Either way, you will finish the negotiations, whether they accept one of the choices, or propose the best of both choices.

If you are dealing with a inexperienced or rigid real estate agent, this choice can confuse them. So, evaluate whether your counterpart is intelligent enough to handle the choices that this technique provides.

A related concept is giving people two choices when you want to get a any decision. When you are negotiating to set an appointment, instead of asking, “When do you want to look at homes to buy?” ask “Would tomorrow be good or Saturday be better?” They will frequently pick one of the two, instead of thinking that one of their other choices is to not set the appointment at all.

Tim has written a book to be published soon called Create a Great Deal that has nine techniques, and some people call them tricks. If you would like to reserve a copy of the book, click here. We discuss techniques as part of the Real Estate Negotiating Institute to learn every trick that might be seen in the market place. If you would like to join us, click here and join the discussion. I hope you can use this tool to close a negotiation and create a great deal.

Negotiation by Harvard Business Essentials makes the point that negotiating experts interpret a large concession as an indication that you have significant additional flexibility.

So, if you give a large concession, your counterpart will think they can get additional significant concessions. Particularly in a buyer’s market, it is important to get the buyer to want to continue the negotiations.

In some parts of America, buyers will occasionally make one offer and if they do not like the response, they will walk away, as their implicit needs are to show they are in control and the buyer wants demonstrate dominance. So, the large initial reduction makes it more likely the negotiations will continue, and the implicit needs of the buyer will be satisfied.

The Negotiation book also makes the point that a small change generally signals that process is approaching the party’s walk away price, and that further efforts will result in smaller and smaller concessions.

For example, if the seller is asking for $300,000 and the first offer is $275,000, the seller might come down $5,000 the first time, $3,000 the second time and $1,500 the last time while saying that the seller will not pay for the home warranty at that low price. When the buyer gets the feeling that they will only get a couple hundred dollars by going through one more round of negotiations, they are more likely to just accept the counter offer so they can wrap up the sale before another buyer appears.

There are fifteen real estate negotiating tools in Tim’s upcoming book Create a Great Deal, that you can pre-order now.

If you want to develop your negotiating skill, you can discuss these rules in detail as a part of the Real Estate Negotiating Institute. I hope this idea will help you in your negotiations.

One of the functions of a real estate agent is to be a shock absorber, to keep the emotions from your client from agitating the other side, or vice versa.

You also need to prevent any hostile feelings from poisoning the interaction.

When you are negotiating over a home, both the buyers and sellers are under stress.

The sellers are giving up what has been the center of their world, and the buyers are trying to establish a new place that will reflect their status, values and ego. The amount of money to be gained or lost is huge compared to what they normally deal with. Then, it is difficult to get an accurate value for any house, so they are dealing with a seller who thinks it is worth too much and a buyer who thinks it is worth too little. Put this against a background where each side fears “being taken,” and you get lots of emotion.

At some stage, the personalities of the parties may not mesh and the contentions will create a charged atmosphere. You need to have grace under pressure. One way to maintain that grace is to convince yourself that if you let the others make you angry, they conquer you by eliminating your ability to control the situation. Do not give them that victory.

I have a strong Irish temper, so it is hard for me not to describe what a “south end of a north bound horse” the other party is being. If you allow yourself to say something obnoxious, your riled-up client will then react by trying to beat the other side instead of trying to put the sale together. When anger takes over, the counterparts stop focusing on logic and rational self-interest to focus instead on how to harm the other party.

Focus on the primary concept that you cannot control the other parties behavior, but you can control your reaction to it. Instead of thinking that your counterpart is difficult, realize your contribution to the difficulty and deal with your own behavior. If you change from being an adversary to being a partner, the cooperation will allow you to collaborate on a better result.

This idea is particularly critical at the beginning of negotiations. What you say at first sets the tone for how things are going to proceed. If you start out arguing, your counterpart will figure that there is no chance for a Collaborative (Win-win) negotiation, and move on to a Win-Lose mode. So, don’t argue, persuade.

Ron Shapiro and Mark Jankowski emphasize the importance of this concept in Bullies, Tyrants and Impossible People, that follows their Power of Nice. The N in Nice stands for neutralize emotions, which I believe to be the most important part of the process, and why it is first. To avoid a hostile reaction, they counsel you to rivet your focus on the issues, so that you will act smartly, instead of react viscerally. You can also develop certain physiological changes, such as Mr. Jankowski’s technique of putting a finger across his lips when confronted to remind him to be quiet while he controls his emotions and thinks before he responds. Take a few deep breaths, change the pace of your speech, talk in a lower tone are all good techniques to de-escalate the emotions.

You have to keep hostilities out of the process not only during initial negotiations, but all the way through the closing. If you let the emotions flair, negotiations that started as Win-win change to Win-Lose, where one side wants to dominate the other. The result is normally a disaster, as even if you get the beginning of the sale together, the remaining stages will be done in the same Win-Lose atmosphere, so the repair negotiations and discussions of any other issues are much more likely to make the sale fall apart. Revenge does nothing good, even though it is so tempting.

I had a sale in Raleigh where the inexperienced agent thought her obligation was to be contentious and to battle every issue. It is prudent to examine every issue, but you do not need to create a battle, as we can disagree without being disagreeable.

On her advice, her sellers refused to do most of the repairs requested by the client of my Team. All of the repairs were typical items, clearly proper to be done under the contract. At first, she tried to say that the sellers could not afford to do them, but we checked with the closing attorney and found that the sellers were making a profit and would get a check for more than $50,000 on the sale of the house. She battled every little issue, just so she could show her clients a victory on items that would save them small amounts of money. These communications were frequently done in writing, so we had to forward them to our clients instead of being able to relay a non-emotional message involving just the issues.

The buyers nearly walked away. The sale was delayed. The buyers did not accept the home in its condition at the walk through before closing because they had been treated so poorly. They would have let the problems go if they were treated well. After the closing, the agent for the buyers was talking to her clients in the parking lot, saying she was so glad she was able to “win this dog fight” for them. After she left, I was able to hear her clients talking as they did not recognize me because my buyer’s agent handled the sale for our buyer. The selling wife said to her husband, “How stupid does she think we are? She made this a miserable experience, we fell for her recommendation to try to save a couple of dollars and it cost us hundreds, not to mention the heartache. Who knows who won this dog fight, but I certainly got bit more than I wanted”. The clients are not looking for a dogfight, they are looking to work with everyone else and get the sale closed gracefully.

Concentrate on the sale and the issues in the sale. Then, try to deal pleasantly with the personalities involved. The personalities are a temporary problem, while buying or selling the house is the long term result.

This rule has nothing to do with using positive emotions to encourage a sale. Homes are bought on emotion. Women have more influence in the buying decision, so concentrate more on their feelings. Play to the emotion that causes a bond to the home. In the rule we are discussing, we are talking about hostile emotions. In this paragraph we are distinguishing emotions like affection and family happiness. Encourage this affection because it will help the negotiations. I gave a letter to a buyer’s agent with my counter offer to sell a property I owned, commending the buyer for some of the work their family had done for the community, as he was in politics. In response to my letter, I received a letter with a counter offer from the buyer saying how she had driven by the house I was selling for about a year, hoping it could be hers. When it was vacant, she and her son would go into the back yard and played catch, after peeking in the windows hoping to it could be theirs. We used the fact that they would go into the yard and peek in the windows hoping to get this house with every counter offer we made.

There are 14 rules to guide your negotiating in my upcoming book Create a Great Deal, that you can pre-order now.

If you want to develop your negotiating skill, you can discuss these rules in detail as a part of the Real Estate Negotiating Institute. Thank you for your interest in real estate negotiating.

In the book Create A Great Deal, I have 19 principles to follow that will make your decisions on how to negotiate easy. Here are four principles:

1. Your Clients’ Interests Are Paramount

Your clients’ interests come way in front of yours. Do not let your client miss buying the home of their dreams just because you want to do some fancy negotiating. If they think it is worth the price, be sure you give them your advice, but if they want to proceed, it is their life. When you are giving them advice that they do not follow, be sure to document it in writing. But, do not document it with something that sounds like a lawyer, do it with something that sounds like you are writing to a relative asking them to reconsider.

In the same manner, if it is going to take forever to negotiate a deal on the property they love, your obligation is to proceed and take the time required to get the best deal. The best way to lose a client, and all their referrals, is to let them feel that you put your interest in making a quick deal in front of their interest in getting a good deal on the home they want. So, do not rush the process.

Another instance where your client’s judgment is paramount is the success of the negotiations. You might think it went extremely well, but if the client is not happy, there goes your repeat and referral business. If you think you did not do well, but the client is thrilled, your business grows.

This is not to say that you always defer to your client’s judgment. They are relying on you for professional counseling. If they want to overprice their home when they try to sell, it is not in their best interest, so you have to do everything you can to prevent it. See also Rule 12: Don’t Let Your Clients Do Something Really Stupid.

The corollary to this rule is that you are negotiating your client’s property, it is not your own. You advise; they decide. In this capacity, you should not take on the tone or position of the client when you talk to the other agent. By being a professional counselor, you can avoid emotional responses to the other agent when their offer is “less than wonderful.” Any offer is an opportunity to make a deal and must be presented. You do not have to be gleeful about it, so you do not give your counterpart the wrong impression. But, being insulting hurts the process.

2. Let the Other Side Feel that They Won

My mother, Lorna, enjoyed arguing and wanted to end the process feeling that she was right. It was a great education, because I learned very early that if I got the results that I wanted, it was not important for me to force the other person to feel that they lost. In fact, if I let my counterparts feel that they won, it was easier to get the results that I wanted, so they felt a “win” while I got a “Win”.

Forcing your counterpart to recognize that you are victorious is counter productive. If they feel that they won, they will do everything possible to close the sale smoothly. If they feel that they lost, they will do everything possible to have a victory before the sale closes.

This idea does not mean that you want your client to feel that they lost. Quite the opposite! You want your client to realize the great results they got in the final agreement. You just do not want to rub your counterpart’s nose in the great results you got.

This concept is particularly useful when you are close to making a deal, and your counterparts fancy themselves to be great negotiators. Find something you can give them as a victory, no matter how small, so they can feel they won, especially if they need to show that victory to look good to their spouse. You do not need to be right; you need to get the deal done.

3. Don’t Push: Present Choices

I have yet to meet anyone who says they like a pushy salesman. We help people make decisions. I learned from Joe Stumpf of By Referral Only to act like a counselor when I am working with my clients. The best way to act like a counselor is to present the various choices to a client, and discuss the advantages and disadvantages of each. Your clients know their life better than you ever will, so if they get complete, accurate information, they will make the right choice.

This principle is particularly appropriate for listing presentations. You discuss with the potential sellers that they can (1) Decide not to sell (2) Go For Sale By Owner (3) Use a discount firm or (4) Use my Team. Present all the advantages and disadvantages of each choice, and if you are the right choice, they will come to it. The first advantage of this technique is that you get clients who really support the decision they made. The second advantage is that you avoid clients who are not right for you. There are some listings that you do not want.

4. Present With Confidence and Conviction

According to President Lyndon Johnson, “Nothing convinces like conviction.” If you believe in your position, exude conviction.

Everyone has had an agent present an offer saying, “I know it is low, but see if you can get us a counter offer.” Don’t do that.

In law school, they teach the future lawyers that 10% of the effect is the words you say, and 90% is how you say it. Be confident in what you are presenting. Don’t say this is your initial offer, that you want to run it up the flag pole, or that this offer is a good start. Each one of those phrases tells your counterpart that you are not serious about this offer. Present the offer as being a good offer.

Do not over-present the offer, however. Do not tell the other agent that you have a great offer for them when it stinks. You will lose credibility. You can always be glad that your client decided to make an offer on the property, and express that happiness. If you get a negative reaction from your counterpart, just deflect it by saying the people she should be upset with are all the other agents who have shown the property and not been good enough to bring an offer.

A true believer is much more persuasive than a hired gun. As an attorney, I helped a Realtor friend who was falsely accused of an ethics violation involving displaying properties on the Internet. I have a conviction about the proper use of the Internet as a wonderful tool for Realtors and consumers, so I am able to present that issue in a convincing manner. The hearing was going fairly well. I noticed a major reaction from the members of the panel when I told them I was not being paid for my work that day because I had done all my research, driven for hours and appeared at the hearing as a matter of protecting a principle that I believed in. My friend received the written ruling that the panel found in her favor the next day, which means they had to rule immediately for us with no reservations in order to have gotten the results in the mail so quickly. I know it was the right result, which may have occurred without that statement, but the conviction helped persuade the panel.

Do You Want Your Career Guided by Principles?

Sometimes decisions are hard, particularly when there is nothing to guide the choices you have to make. If you have strong principles to guide you, the choices are easier. If you would like your career to be guided by principles that have been tested and proven over decades, click here and join the Real Estate Negotiating Institute and participate  in the study of the principles that guide your negotiating decisions.  If you prefer a text to computer discussions, you can click here to pre-order my book Create A Great Deal, The Art of Real Estate Negotiating.