In real estate, negotiating is an art, and there isn’t one mainstream method to ace it. Many times, negotiations fail because one side takes on a predatory approach which ultimately makes the other party harden up and become resistant.
The awareness of all the parties in a real estate deal has increased dramatically over the years. Thanks to the internet, most people are aware of market conditions when they buy or sell.
However, there are still many instances where either one or all the parties involved don’t negotiate effectively.
If you have found yourself in such situations where your negotiations went south, here is some advice on avoiding mistakes so you can bounce back and excel in your next deal.
Before heading to any real estate negotiation, it is crucially important to plan out the entire process. Make a list of all the questions you have for the other party, as well as what you plan to achieve from the deal.
Once you have an entire outline in front of you, it will make it easier for you to be more confident during the meeting. Also, you won’t forget anything in the heat of the moment. Items may include:
- a) Inquiring the seller:
- Regarding ownership of property
- Reasons for selling the property, whether the seller is under any pressure to sell.
- Legal information about the property
- b) Inquiring the buyer:
- Regarding their interest in property
- Legal matters which will directly impact the purchase of property
- c) Asking neighbors/contractors about the property:
- Are there any underlining problems with the property/surrounding area, etc.
Aside from that, it is also useful to plan out a contingency plan beforehand in case the primary negotiation plan fails. That way, instead of ending the negotiation when the primary strategy fails, the two parties can try to work on another solution, which has higher chances of being successful since, by then, both sides are clear on what the other is looking to achieve.
Also, noting alternative options available should the deal fail, will ease some of the pre-negotiation pressure.
2) Adopting A Win-Win Mindset:
When taking part in any negotiation, changing the mindset from aiming for a win-lose situation, to a win-win situation, transforms the negotiation process completely.
When someone has a win-lose mindset in mind, they give off a predatory vibe to the other party. Because of this, the other party feels cornered and makes a defensive decision. The win-lose stance usually produces a lose-lose outcome.
On the contrary, when you have a win-win approach, you take into account the other party’s objectives as well. In other words, you put yourself in their shoes. As a result, the other side will feel more comfortable to compromise and work together, so both parties get what they’re targeting. Just like Henry Boyle says: “The most important trip you may take in life is meeting people halfway.”
3) Keeping A Cap On Emotional Reactions:
Whenever you’re in the process of making an important decision, such as a real estate deal, it is essential to be proactive, instead of reactive.
Many negotiations fail because one party either gets very heated, and says something unprofessional, or gets very expressive on their need for the deal to succeed, essentially showing their cards to the other side.
Psychologically proven, decisions made emotionally tend to be less advantageous. Therefore, before entering any meeting, all emotions should be left outside the door, so that you make decisions based on the actual pros and cons of the deal.
Communication is the key to any successful negotiation. You have made a plan; now you have to communicate that to the other party in a way that you achieve your objectives.
Remembering your own goals throughout the meeting ensures that you don’t settle for something that is way less than what you planned.
The communication between the parties should be honest and open-minded. Both sides should clarify their objectives, as well as what they’re hoping to achieve out of the deal. Along with that, don’t be afraid to communicate that you’re prepared to walk away in case your goals are not met.
5) Be Assertive:
Just putting aside emotions and focusing on objectives isn’t enough to win a negotiation. You have to be assertive in your communication and body language for the other party to take you seriously.
You can be assertive in many ways. A general norm of negotiation is that whoever has the most power, gets the most advantage. Applying that power in the form that you put pressure on the other party, be it by convincing them that you have other options in hand as well, or in general willing to compromise, but at the same time being tough and not compromising more than it’s necessary.
About the Author:
Dan Boyle is a real estate agent in Marco Island, Florida specializing in waterfront and beachfront property. He is the team leader of The Boyle Team and has authored several in-depth guides to buying Florida real estate and second homes.
January 16, 2018