The Art of Negotiation
Recently I stumbled upon an article written by "Million Dollar Listing New York's, Ryan Serhant" called "Three Pro - Negotiating Tips That Will Keep Any Real Estate Deal Alive" published on Forbes.com
With the spring market heating up and hot our tails... This article got me thinking... The Art of Negotiation is a huge player in the real estate world, whether it is luxury real estate or a small condo. Edmonton's market as of right is not an easy market to play ball in, selling or buying. You call it a buyers market so the buyers are looking for their best deal but then you have the sellers who also want to feel like they are getting a great deal on their home. So I guess that's where this big word NEGOTIATING has really come to play in todays market.
So what really is Negotiating? Well according to the Cambridge English dictionary "Negotiation is discussion aimed at reaching an agreement", sounds pretty easy? Think again, when you are playing the negotiation game with clients, customers, or even other realtors this is where it can get a bit sticky. Both parties want to feel as though they have "won" or "got the better deal", so us as realtors, we have to make each party feel that way but ultimately still reaching the same agreement. In the famous words of Ryan Serhant:
"There is nothing worse than investing your time and energy into a deal only to watch it go up in flames. It's especially frustrating when you know you could have gotten the deal closed if someone would have been flexible, even a tiny bit. Instead both sides stayed miles apart, refusing to budge. The buyer won't come raise their offer and the seller won't drop theirs and it feels like there is nothing you can do. I call this the standoff. The standoff is a terrible, dark place where deals (and egos) go to die a painful death. Agents can lose valued clients, and clients can lose out on their dream home. But a standoff doesn't have to represent the end of a deal."
So with all that being said, how did Ryan Serhant keep the deal alive and put the standoff to rest? Much like any of us other agents the standoff is a huge "deal breaker" if you will, its an unknown zone in an almost completed transaction that can ultimately live or die.
The way to put a standoff to rest is you guessed it, by NEGOTIATION. Negotiation is about forcing clients, customers or other realtors into a deal and for them to see things only through your eyes or your side, its about bringing a different card to play to a difficult table to hopefully end in mutual agreement that makes both parties believe they have benefitted from the said transaction.
But how do you bring that different card to the table or better said "how do you get people to see your point of view and how do you guide them into making different decisions"? Well according to Ryan's article on Forbes, this is one of the best skills you can learn and have as a realtor.
"Never forget you are working with humans. They are coming to the table with different emotions, experiences, and expectations. What got your last client to raise their offer or come down a little bit from their final price will not necessarily be the answer for the next situation. Push the numbers aside for a minute and focus on the person. Think about what's motivating them? How are they perceiving the situation?" - Ryan Serhant
So here are three tips Ryan gives to negotiate and leave the "Standoff" in the dust!
- PRICE PRICE PRICE - What does the price represent to both the buyer and the seller? **Remember you can only get what someone else is willing to pay** The price in this situation would represent making money and losing money. "In this case, even though the offer coming in wasn't ideal, I knew the legacy price of the apartment and I knew my seller was still making money" - Ryan Serhant In the current deal you are negotiating what does the price represent? Is it making money? (Maybe not as much) Breaking even (Not really losing or winning)? Or losing money (they could lose more in the future)?
- PRESSURE PRESSURE PRESSURE - Have you ever had client say they were ok with losing out on a great deal on a new home? "Apply pressure to clarify the situation for your client. In a standoff, gently remind a buyer or seller that no can predict the direction a market is going to go so it does not make sense to try to time the market" - Ryan Serhant A client should make a move on a property they want before it potentially gets more expensive or harder to negotiate a favourable term. A selling client should take in to consideration the offer they have on the table, not think about a potential higher offer that may never come.
- PERSISTENCE PERSISTENCE PERSISTENCE - Give you client time to breath when presented with an offer, a counter offer, or even a first offer. Then Follow up, follow up, follow up, repeatedly and frequently. "Send them comps that support your argument. Check in and remind them the offer or house won't be available forever. Reiterate the positives: It's a great house! Its exactly what you are looking for! You've still made a great return on your investment with this offer!" - Ryan Serhant Think about the message you need to get to your client persistently right now and act on that.
Soon you will learn with experience and some hard negotiation skills that the "dreaded standoff" is just part of the real estate game. It will be something you can anticipate and then conquer wit your need found skills, leaving the frustration of dead or dying deals in the past!
To read the full article by Ryan Serhant, visit www.forbes.com and search "Three Pro - Negotiating Tips That Will Keep Any Real Estate Deal Alive"