Sep 5, 2017
Negotiations are a crucial part of all real estate transactions. Improving your skills in negotiating is the topic for better serving your clients this month. Darren Kittleson joins Monica to define what a win-win transaction is, and how to achieve one. As a real estate agent, it’s important to react professionally during a transaction, so your clients are put in the best situation. They will discuss creative ways to negotiate more effectively, so in the end, there is a favorable outcome for your client.
We negotiate far more often in our lives than we realize. As kids, this is something many people do naturally, but somewhere along the line we lose that natural ability. Approaching negotiation with the attitude of a child may lead to surprising outcomes, and allows you to hone your skills as a professional negotiator. Just ask — the worst thing that can happen is someone says no. Darren suggests negotiating on a daily basis to practice the skill, so it’s there when you need it in a real estate transaction.
In almost every culture in the world, there is a negotiation expectation that is unique to that culture and in the United States, it is not a familiar place. From a real estate perspective, taking the time to learn strategies for negotiation is one of the value proposition items that can increase your worth as an agent. Your negotiating skills could potentially yield a better transaction position on behalf of your client, and this can really help to set you apart in your market.
There are a number of places in a real estate transaction — as well as in the relationships between an agent and a client — that provide an opportunity for negotiation. Some of these places include: during the interview to be a client’s listing agent, negotiating the listing price, negotiating the contract and finding out the client’s motivation. Ideally there’s negotiation happening at almost every step of the transaction.
Negotiations are not always about the price. There are other terms and conditions that can be negotiated to get the best outcome for your client. Some of these include the timing of the sale, and making sure the right offer will close or appraise. Darren refers to these as strategies of the transaction — and urges you to make sure that, as a Realtor®, you consider all the factors that could help your client.
Most people want to have a win-win situation in real estate transactions. While there are some agents that think they have to have a win-lose outcome, everyone will benefit for future transactions by striving for a win-win. This starts by setting expectations with the client — letting them know that your goal is to negotiate a win-win so they understand your discussions and the decisions you make together. One of the best strategies that an agent has is to get in touch with the agent on the other side before the transaction gets started; they may be able to provide information or terms and conditions that would be helpful to know up front. Communicating voice-to-voice will be more effective in setting up the relationship for a win-win transaction. Knowing everyone’s key terms up front is helpful, because while they could be a non-issue on your side, they could be the selling point that makes it a win for the other side.
One of the keys in negotiating is to recognize that everybody will have their own perception coming into it, and that is their reality. As an agent, you have to work in the realm of what they believe to be true. There has to be an understanding that as an agent you will advocate for your client, but still be friendly with the other party. Operating like this leads to better outcomes for everyone. When it comes to emotion, you need to stay level-headed during negotiations, though it may be an emotional experience for your clients. Don’t let negative emotions take over and become a factor. Monica works to recognize the personality types of the parties involved, and tries to come up with a decision that is acceptable to all.
As a consumer, if you express your motivation to the agent, that helps the agent guide the transaction to get what you are looking for. As an agent, you have to ask the right questions to figure out what is important to the client. It has likely been several years since they were last having this conversation, and leading questions help agents get the desired terms. We do the customer a disservice if we don’t dig deep and figure out what’s really important to them. Revisit motivation each time there is a conversation about the sale, to keep up with any changes that might affect the timeline.
How does technology play into real estate transactions? Darren discusses the effectiveness in communication methods. He references a study that showed that the greatest effectiveness in expression of feeling and intent comes from body language and tonality — aspects you can only gauge in a face-to-face or voice-to-voice interaction. With text or email, there is an archive of what was said or what exchanges were made. This can be a benefit or a disadvantage depending on the situation. With access to only the words, you may not get the full meaning behind the message.
As agents it’s important to be involved with other agents in your market. Building connections and rapport with other real estate agents can help get better outcomes for both sets of clients.
Monica talks about the book Getting to Yes. This book recommends that in order to resolve differences, you have to separate the people from the problem. This goes back to recognizing who the professionals are in the transaction, and removing the emotion. When agents are driven by emotion, the problem and the people get intertwined. From the beginning of the transaction, it has to be about the issues rather than the emotion — both when communicating with the other side, and with your own client.
Educate your clients right from the start! Proactively setting the stage for negotiations from the beginning can make a transaction much smoother, because people will know what to expect. The education process should continue throughout the transaction, and it’s important to take the opportunity to have teachable moments. As agents, you can be more effective if your client is educated and aware of what is going on in the negotiation. This can help grow your own business, if your clients refer you to their friends or family.
Think outside the box for creative negotiations. Monica describes a situation in which creative concessions were made to improve the value of the house. If you can’t bring the buyer and seller to an agreement on one aspect, it’s important for agents to think about alternatives that could solve the problems to get everyone to agree. This makes for a better emotional experience for the client, and could potentially lead to greater earnings or savings, depending on the situation.
Darren teaches a class called The Real Estate Negotiation Expert that is a certification created back in 2016 by the Real Estate Business Institute. It seeks to fill the gap in the skillset around negotiations. This two-day certification course teaches strategies, techniques, and planning, and also provides opportunities to try these out in different negotiation situations. By improving this skillset, you increase the opportunity to better serve your client as well as grow your business.
Darren’s final thoughts: For real estate agents - your becoming a better negotiator really is an opportunity to increase revenue for your business. For consumers - a skilled negotiator in your corner will probably help you get more money (or the terms and conditions you want) out of a deal, as well.
Darren’s Website: DarrenKittleson.com
Center for Real Estate Development online learning: onlinelearning.realtor
Getting to Yes, a book by Fisher, Ury and Patton