Negotiation is an essential skill and tool for top producing real estate agents and brokers.
But what is negotiation exactly?
Unfortunately, negotiation is a term often used but often poorly understood. How is that different to deal making and selling? Why is it so important?
Negotiation is different to sales in that negotiation looks to ‘trade’ elements of a transaction, rather than increase the desire for them.
Overall, negotiation can be a key tool in helping you close more deals and get more of what you want out of a transaction.
What is negotiation?
Negotiation is the process of bargaining elements of a transaction. These elements can be simple things, such as allowing a buyer to show up an hour earlier for a private viewing of a property, or more advanced such as offering later payment terms.
This is different to selling. Selling seeks to persuade a buyer, and looks to increase the desire and conviction for action to do something.
For example, you may talk about how much in demand a property, the fine craftsmanship of the kitchen, or the newly refurbished bathroom to increase a buyer’s desire for the property. However, none of these things practically provide an extra element outside of the deal to the buyer.
This doesn’t mean that they are necessarily separate actions. Often, to sell you will need to negotiate to make a deal more attractive to a client or buyer.
How does negotiation work?
Negotiation works by offering or subtracting.
For example, if a client needs a particular house sold by a certain timeframe, then you may need to ask for an additional marketing budget.
Alternatively, perhaps a buyer is happy to purchase a property aside from having to replace a section of fencing. Working with the seller, you may be able to offer to replace the fencing in need of repair in order to satisfy the buyer.
Why use negotiation?
Negotiation is powerful for two reasons.
Firstly, negotiation can help you close more deals. Have you ever met an inflexible sales person? Did you ever think, if they gave you just a little wiggle-room in the deal, that you would have taken it there?
This is an example of failing to be flexible and negotiate to close a deal. For agents who do negotiate well, expect that you will be able to close more deals.
Secondly, negotiation can help you get more from a deal. Negotiation goes both ways.
If a client should ask for a special consideration, you may be able to ask for a consideration or benefit in turn. Admittedly, you will need to be careful with this not to put off you buyer or client, but the opportunity does exist and can be leveraged not just in a real estate context.
For example, if you are being asked to provide an extra email newsletter promotion for a client, and you are short on time, you may ask whether it would be possible to schedule this task for a later date when you do have the time and resources.
What is the art in negotiation?
The art in negotiation lies in the human factor and knowing how hard or soft you can push a particular deal.
How much can you ask of a person from a transaction? What terms are the right ones, and favourable enough for both parties? How can you maintain a healthy, positive client relationship?
Artful negotiation will leave both parties feeling positive about the transaction but also will have covered the topic efficiently and effectively.
Negotiation can be used in selling to help convert more transactions and generate more commissions. Artful negotiation promotes goodwill amongst both parties, and will help you maintain long term mutually beneficial relationships with your clients.