Negotiation is not an easy thing. It is essential to behave in the correct way, know the strengths and weaknesses of the opponent and your own self and be well-prepared to present your point of view. There even exists a list of dos and don’ts when it comes to conducting a successful negotiation and people try to follow them as much as they can in order to win the game.
There is slightly a different story when it comes to a real estate negotiation. It is all about big money, strict rules and well-thought strategic moves where no one has a right for a single mistake, otherwise, they lose it all. The real estate industry, as a rule, does not give you many second chances, which is the main reason for getting to know all the important rules of conducting a real estate negotiation and constantly mastering your skills.
Let’s have a look at some of the existing tips to win a real estate negotiation and close the deal.
Know the market
Knowing and understanding the current real estate market is one of the first steps towards a successful negotiation. It is essential to know what is going on before you start the discussion and get into active negotiations. It is never pleasant to lose due to a lack of knowledge. The real estate market tends to change and might be different from the one that everyone faced a year ago. Sometimes the rates might happen to be inflated which might affect the negotiation process.
On another hand, it is vital to be aware of what may affect the property value. If the house has an old leaking roof, it will significantly decrease its value, while the new one will be an advantage. Same thing with the walls, ceilings, wires and carpeting. It is good to know what needs to be discussed, looked at and thoroughly checked before closing the deal.
People, who are planning to invest in a house, will be looking for every single drawback that might exist inside or outside of it. It is essential for the seller to make sure that there are no:
- broken windows or holes in the walls;
- leakage either in the roof, bathroom or kitchen area;
- wiring problems;
- dirty carpets;
- torn wallpapers.
It is a pity to lose negotiations due to the small details that might irritate or upset the potential buyer. Before starting to show the house, it is vital to conduct a thorough inspection, check every corner and fix whatever is needed to be repaired. You might be surprised but the way you see your house and its small drawbacks will drastically differ from the way buyers will see it. Something that you have never seen before will be noticed at first glance.
It is good to make the house look clean and tidy in order to avoid any problems during negotiations and focus on more important things related to the selling procedure.
Although the outcome will differ from seller to seller and from buyer to buyer, the most important thing will always be reaching the desired outcome, whether it is a fast deal closing or a certain amount of cash that needs to be received in the end.
If, for example, the most important factor is closing the deal in the shortest amount of time, there can be some flexibility in terms of negotiations. All of the strategy will be based on time limitations. There might appear a strong need for compromises which is a normal thing when it comes to closing everything within a set amount of time. If something needs to be repaired, the seller might end up giving a credit to the buyer to conduct those works on their own rather than organizing it all from scratch as it definitely takes more time to do so. There might be more expenses, but if they are talking about the fast closure, it will not matter much as soon as they get the deal.
On another hand, if the seller is highly concerned about money and wants to close the deal on his conditions, it is vital to stick to it till the end. Money will be the core of any negotiation. If there is not enough, they should look for another buyer until the right one appears. They say that every camper should get a feather, so no need to agree for less until you find what you are looking for.
It is all about building rapport and trust. That might sound quite corny, but most people forget about it rushing to close the deal as soon as possible or paying attention to completely different stuff. Regardless whether you are dealing with a REIT or a potential buyer or seller themselves, it is important to build relationships and get to know the other side.
People tend to trust someone they know or met at least once. Scheduling a meeting to get acquainted, asking questions about their expectations and hopes, considering their goals and talking about things you are looking for, makes the difference. There will be a fellow feeling next time you all meet which will help take away any possible tension during negotiations.
Secrets of persuasion
Have you ever ended up giving more tips to a waiter who has given you a small cookie with the bill? Or maybe you once wrote a positive review on an item because you received a small gift with it which you did not actually order. Those people actually persuaded you to do so but you haven’t even thought about it in that way. There exists a set of persuasion techniques which might be extremely helpful when it comes to real estate negotiations.
Firstly, people are more likely to give things in return when they are being given something. This is a story about a cookie and waiter’s tips. The technique is called reciprocity and is all about how both sides benefit from exchanging things, advice, etc.
Then comes scarcity. When the house is somehow unique or there is something making it one of a kind, like antiques or designer works, the buyer is more likely to be convinced faster as there is a possibility of owning things others do not have.
Authority is another technique and is all about having power to influence others and their decisions. If someone is an expert in the field they are working in, people are more likely to trust them. If a person has many certificates on the wall of their cabinet, people understand that those papers were issued for a reason. People are in general dependent on an authority opinion when it comes to making serious and life changing decisions.
Consistency, as a persuasive technique, is a key to better deals, loyal clients and overall success. When someone is constantly doing a good job, and has good relationships both with clients and brokers, such a person will most of the time benefit. First of all, people around him will feel more comfortable, secondly, the person will be highly appreciated in his circles.
Another technique is all about liking. People tend to stick with someone who shares the same tastes in movies, clothes, food, or someone who is just similar to them. During a real estate negotiation, it will be beneficial to pinpoint something that a person, on another side of the table, likes. Try mentioning that amazing swimming pool that they like so much, or show love towards that antique table in the living room that they also fancy. It actually works.
Consensus is the last technique to use during any real estate negotiation. Consensus is all about general agreement about something. If a real estate agent has a good reputation among colleagues and clients, there is a bigger possibility that his opinion will matter during a negotiation. If the house looks like every other photo on Instagram or Pinterest, with a fireplace, a marble counter in the kitchen and wooden beams on the ceiling, it gets bigger chances to be sold quickly and efficiently.
It’s always the small pieces that make the big picture.
A lot of people do not pay attention to things that are inside the house and consider them an integral part of the house rather than its inclusions. It is good to mention that a refrigerator, a washing machine and a dishwasher are not included in the total price and are those things which can be negotiable. Sometimes it helps with the sale, other times it might be leveraged for adjusting the terms, repairing or inspections.
There are actually many things that people forget when it comes to selling the property but which are always remembered by those who buy it. Do not underestimate the house and things that make it a desired property on the market as they might help in negotiating and closing the deal.
Real estate negotiations are not about uncertain promises. Everything should be written, signed and paid for. When a seller finds its buyer, the first thing to do is decide on the money deposit which is a sign of the buyer’s commitment. Once the offer is made and the agreement is signed, the buyer needs to make a deposit which is, as a rule, between 1-3% from the total purchase price.
The amount can differ depending on the current situation on the market and, in case of a high demand of the property, might be increased. Sellers might ask for a bigger deposit in order to secure the deal. For buyers, however, it will be a sign of a serious competition around their preferred property. In this situation, sellers will benefit in negotiations as asking for a deposit will persuade the buyer to close the deal faster to avoid losing it.
Real estate negotiations can be a tough thing unless you are well-prepared to start the game. Knowing the market and the desired outcome, getting acquainted with the clients and understanding better what they are looking for, remembering that property conditions always matter and never forgetting about house inclusions and a mandatory deposit, will make negotiations smooth and efficient. While all of the above will be highly beneficial, secrets of persuasion are something that people rarely notice and pay attention to, but are the things that are able to make the biggest difference and change the negotiation flow to your advantage. Regardless of the fact that negotiations are one of the biggest challenges when it comes to closing the deal in real estate, they are totally worth it when it comes to the outcome and final numbers.