Inman News Review
Top tips from real estate broker Tim Burrell
Negotiation is the No. 1 skill that you need in real estate to succeed. Are you ready to master the secrets of becoming a master negotiator?
Whether you are a newbie or a 30-year real estate veteran, growing your negotiation skills is one of the best ways to improve your conversion ratio and to close more business. In his book, “Create a Great Deal,” Tim Burrell provides the strategies you need to maneuver through virtually any tough real estate negotiation. Here are some of Burrell’s top tips.
1. Trust is paramount
How do you establish trust in a negotiation situation? There are three key steps: Listen, ask questions, and let the clients be in control of the process. Outline their options (including not accepting the offer) and allow them to decide which option is best for them.
2. Get something in return
Some negotiators constantly grind the other party to obtain concessions. To break this pattern, when you make a concession ask, “If we do that for you, what are you willing to do for us?” If you allow the other party to come up with a concession, it may be better than what you would have proposed.
This is the opposite of “getting something in return.” In reciprocity, you offer to give something first in order to get something back. For example, if negotiations are at an impasse, you can restart the negotiation by making a new concession. For example, you could say, “We could move up the closing date. Is there something you could give us in exchange?”
4. Flinch and vise
When a buyer wants to make a ridiculously low offer, grimace (that’s called the “flinch”). After you grimace, respond by saying, “You’ll have to do better than that” (that’s the “vise.”) This approach often causes the buyer to raise the offer. If not, you have uncovered that this may be the best the buyer can do.
5. Let silence do the heavy lifting
Make your proposal and wait for the other party to respond. Most Americans are uncomfortable with silence and feel compelled to say something. In contrast, people from other cultures often use silence to get what they want. Burrell recommends that silence is particularly effective when the other side has made you angry. Rather than lashing back at them, silence actually accomplishes more.
6. The decoy
It’s always smart to include at least one item in your negotiation that your clients are willing to concede. For example, if the sellers want to close after school is out, the buyers could ask to close quickly. When the sellers make a counteroffer pushing the closing date back to the end of the school year, they will feel as if they have gained a major concession. You can then ask for a concession in exchange for the later closing date.
7. Give your clients alone time
When your clients appear to like a property, find a way to excuse yourself so they can talk in private. This is especially important for people who do not speak English as their first language. The only buying sign you may see will be when they excuse themselves to have a private conversation in their native language.
8. Don’t accept the first “no”
According to Burrell, for determined negotiators, “no” is merely an opening bargaining position. This is particularly true for bureaucracies including the government, banks, major builders and insurance companies. If you accept the first “no,” they don’t have to do any additional work. Burrell said the same thing is true for home warranty insurance. If they can tell you that, “No, it’s not covered” and you go away, their problem is over. Be persistent.
9. Accept a really good offer slowly
If you receive an offer that is way too good, don’t jump up and down with glee. The other party will believe that they made a mistake. Instead, question some of the terms. Suggest that you might have to stretch to accept their proposal. Alternatively, ask them to throw in a little something to get you to accept. That way, the other party will feel that they did all right rather than feeling that they gave too much away.
10. Translate issues into numbers
Assume that your buyers are making an offer on a house that is listed for $150,000. The buyers and the sellers are $3,000 apart. The buyers are resisting coming up with the additional $3,000. Each $1,000 of their loan amount results in an additional $6 per $1,000 in payments. In this case, the additional payment would be an additional $18 per month. Explain to the buyers that if they are able to skip one inexpensive restaurant meal per month, they will be able to get the right home with the right schools for their children.
If you are serious about upgrading your negotiation skills, “Create a Great Deal” is a great way to do it.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of “Real Estate Dough: Your Recipe for Real Estate Success” and other books. You can reach her at Bernice@RealEstateCoach.com.
Reproduced with permission from Bernice Ross