The Negotiation Dance

Effective give-and-take communication requires sensitivity and certain formalities. Here's how to keep a solid deal from derailing.

September 16, 2015

The hard part isn't over once you’ve found the home of your client's dreams or received a promising offer for your listing. Perhaps the most vulnerable point in the transaction comes when you’re negotiating the offer. Your client, whether buyer or seller, is counting on your insights to come out with the best deal possible.

In these days of multiple offers in many markets, you need to stay calm under pressure, often while managing the expectations of a number of personalities. Start by making sure you and your clients are on the same page: In other words, your negotiation style should reflect their preferences.

"Agents assume that buyers and sellers are going to be okay with the way they negotiate," says Peter Ruffini, gri, vice president and managing broker of Coldwell Banker Residential Brokerage in Cohasset, Mass. "Just because you think something might be an acceptable risk doesn’t mean they do."

You may also need to adjust your communication style. The rapport you and your client have established with each other won’t always work with other parties involved in a negotiation. You may need to be more formal. Consider these methods for improving the negotiation experience for buyers and sellers while strengthening your client’s position:

Stop texting. Communication should be crystal clear in negotiations, and texts are too often misinterpreted. Vow to speak only by phone or in person with all parties—including your own client—while negotiations are ongoing. "I don't want somebody interpreting the offer the wrong way," Ruffini says. "I want them to look at it the way I want them to look at it. So if I can, I want to do it in person; if I can’t, I want to do it over the phone.” When coaching other practitioners, "I say this probably a half-dozen times a week: 'That should have been a call, not an e-mail. You should have gone over to talk to the client instead of continuing to text,' " he adds.

Don't ask open-ended questions. Say you’re helping sellers address a buyer's demands for inspection concessions. Don't ask the sellers, "What do you want to do?" Instead, give them three options: accept the concessions and write them into the offer; reject the concessions and look for another buyer; or negotiate some of the concessions. Open-ended questions add stress to an already tough situation, says Corinne Fitzgerald, CRS, GRI, broker-owner of Fitzgerald Real Estate in Greenfield, Mass. But remember, your goal is to empower clients, not overpower them. "It's very important that you don’t tell them what to do," Fitzgerald says.

Come to the table with a bargaining tool.  For sellers, that might be a preinspection of their home. Knowing a property's problem spots up front lets sellers decide in advance what they are willing to fix and provide quotes for what they aren’t. It can also preempt buyers' efforts to renegotiate price based on those issues, says David Harts, GRI, associate broker at Keller Williams Realty in Santa Rosa, Calif. "If there is a problem with the pool, and the buyer wants $20,000 back, that’s not the time to go get those quotes because you’re not going to get them in a timely fashion,” Harts says. "Having them in your pocket is a strong card you can play to reduce the buyer’s demands."

Be brutally honest. In tough negotiations where the other party won't waver, it may be okay to be vulnerable and state exactly why your client can't meet those demands. But do it in a way that conveys your client’s story and makes it relatable. Karl Whittenbarger, a sales associate with Heartwood Properties in Boulder, Colo., recently represented buyers who were having a difficult time getting their offers accepted. "We had lost out five times to cash offers," Whittenbarger says. "In the next offer, I cut to the chase and said, 'Look, this is who my clients are.' " He explained that they were both educators buying for their daughter and one day hoped to retire in the home, but they simply didn't have the $275,000 in cash that other bidders had offered. The story resonated with the seller. "What got us in the door," Whittenbarger says, "was brutal honesty about who they were and why they couldn’t pay cash."

Never speak for your client. When making negotiation decisions, remember to say to the other party, "My sellers have instructed me that this is how we’re going to handle this," Ruffini says. You don't want to sound like you're the one making the decision because if your clients change their mind, you'll come off looking indecisive and unprincipled. And nothing undermines your position more than losing the other side’s respect. "If the other negotiator doesn't think you're being genuine or thinks you don't know what you’re doing, that's going to factor into the negotiations," Ruffini says, "and it's going to be more difficult for you to negotiate well on behalf of your clients."

Lynn Olson is a Chicago-based writer and editor.