Barry Elms, president of Strategic Negotiations International, is a Signature Series speaker for the National Association of REALTORS®. He has spoken at NAR events nationwide. His book, Because I Said So – A Guide to Negotiating With Children or Grownups(2012), is available through Amazon and other booksellers worldwide. To learn more about Barry and his services, visit www.barryelms.com.
7 Keys to Negotiating Like a Pro
Whether negotiating internally with your team or passing on strategies to salespeople working with clients, these seven tips will pave the way for a smooth agreement process.
July 24, 2015
I don’t know anyone who negotiates more often or more effectively than real estate professionals. Their career depends on their ability to secure successful deals. It’s also the job of experienced broker-owners and managers to develop effective strategies for agents and build contractual relationships that ensure mutually satisfying deals and successful careers.
There is a core mentality that exists with all effective negotiators that serves as an invaluable checklist for both internal negotiations with agents and team members and external sales negotiations. There are seven key points to keep in mind when it comes to negotiating like a pro. This list is in no particular order of priority. Let’s take a look, and feel free to pass these on to your agents:
1. Credibility. Never make idle threats or false promises when negotiating with agents, and agents should also never do this in a transaction. Successful deals depend on the other party believing that you will do what you say you are going to do, for better or worse. Build a reputation as someone whose word can be trusted, and never allow yourself to get caught in a bluff. Credibility is the foundation upon which all negotiations rest.
2. Personality. Self-awareness is a major factor in developing strong emotional intelligence. Know your personality, and make sure it does not inhibit your ability to relate to others. Avoid displaying annoying habits that may irritate others, such as interrupting the other person mid-sentence, belittling their opinions, or dismissing their argument without even considering it. Remember that people like to do things for people they like. And perhaps more importantly, the opposite is equally true.
3. Location. As the saying goes in real estate, “Location, location, location.” In negotiations, location refers more specifically to the time and place in which the negotiations are conducted. Selecting the right time and place to meet with clients, make an offer, counteroffer, or resolve internal contract or team issues is an integral part of successful negotiations. Where, when, and how are the three points for controlling any negotiation. Some deals are better handled face-to-face, while others may benefit from a fast phone call or written confirmation. And remember to pick your moment, because sometimes timing is everything.
4. Expertise. Nothing will sabotage a real estate negotiation faster than not having your facts straight. Never state that something is a fact unless you can back it up with proof. Always be prepared to show supporting evidence for your facts, particularly if the other party is inclined to disbelieve you at face value. When working with clients, agents should always explain facts using easy-to-understand language (not the same as dumbing it down), pausing to answer any questions of clarification. If you can’t explain it in simple terms, you probably don’t know it well enough.
5. Information. If I had to single out one of these seven points as being the most important, it would be information. In every aspect of negotiations, understanding the needs and agenda of the other party is the card that trumps all others. Earlier in my career as a coach, I purchased a house from an investment company. By using a variety of strategies and tactics, I secured a very satisfying deal — at least, that was what I believed at the time. Some months later, one of the senior executives of that investment company bought the house next door, and we became friends as well as neighbors. One time at a backyard barbecue, he casually mentioned that the house I purchased from his company represented a large part of their profit for that year. Now if I had known that information at the time … well, who knows? The message of the story is that there is no substitute for information.
6. Authority. To be successful in negotiations, the other party must believe not only that you will do what you say but also that you can. Displaying authority is not just a case of possessing a managerial title, although that helps. It is also important that you calculate the authority you have to follow through on promises made. Don’t make promises or commitments unless you know you have clear authority to do so. As I stated earlier, nothing sabotages a deal faster than a broken promise.
7. Rewards and Consequences. There is a saying in business: “You have to be ruthless to be successful.” My take on this is that you don’t need to be ruthless to be successful, but you do have to be prepared to be ruthless if necessary. The same principle applies to negotiating. You don’t need to make power plays to be a successful negotiator, but you do have to be prepared to make them as needed. People who use threats to intimidate in the negotiating process do not impress me; that inevitably leads to confrontation and conflict. Conversely, I have little patience for people who avoid conflict at all costs by telling the other party what they want to hear. Brokers should let agents know the rewards or consequences of their behavior. This is an important aspect of effective negotiations. Handled well, it forces the other party to reflect on the impact of their choices, adding another dimension to their decision-making process. Don’t leave it to chance, even if the conversation makes you feel uncomfortable. Always let the other party know the consequences of their choices. That way, they will have the opportunity to change their position without you actually having to impose your will.