You need to develop certain principles that work for you in negotiating, then follow them nearly every time. Please notice the word nearly, as I hardly do anything every single time. Negotiating is an art, with a little science that is mostly probability, so you need to know when to apply a principle, and when to shelve it. If you do not follow your standard principles, be aware of that decision and make sure you have a valid reason for changing from the standards that normally guide you to success. Violating a principle normally comes back to haunt you.
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.