REAL ESTATE
NEGOTIATION INSTITUTE

Unless you have a partner, mentor, or other third party who will provide honest, non-judgmental feedback, chances are good that you will have to evaluate your own performance in any recent real estate negotiation. This step in wrapping up the client file should not be skipped because an honest analysis is what makes you better at your job.

First and foremost, if you sacrificed part of your commission to get the deal closed or to keep the client happy prior to closing, then you could have done better. Skilled negotiators know how to gain and keep the client’s trust, and they know that the full commission is well earned in a successful real estate transaction. Confident negotiators know how to determine what the stumbling blocks are and can use sound reason and logic to overcome the barriers without “paying” for a problem with their commission.

If you only recall the parts of the negotiation where you were successful, then you could have done better. Most negotiations, including real estate negotiations, are both give and take. Skilled negotiators are always looking for ways to satisfy both sides in a negotiation. They objectively review the negotiation for any “give” point where they might have gained additional advantage for their client or have better overcome an objection.

If you are not regularly sharpening your negotiation skills with new negotiation techniques, negotiation tips, and negotiation classes, then you could have done better. Skilled real estate negotiation depends on keeping ahead of the field, employing new methods of communication, and exploring new techniques and approaches to old issues.

In today’s market, your proven negotiation skills are an asset that sets you far apart from your competition. Effective influence techniques will help you sign more clients, close more deals, achieve higher rewards, and find true satisfaction in the real estate profession.

The best professional agents both protect their clients and help them achieve better results versus average agents. Negotiation skills are the primary skills used to help accomplish both of these goals. Think about all the different negotiations there are in real estate: agent to broker (owner), agent to seller, agent to buyer, agent to agent (broker to broker), rainmaker to team member, agent to third party (title company, lender, inspection, etc.), agent representing seller/buyer to agent representing buyer/seller. How effective you are at influencing or persuading others determines your level of success in real estate (and in life!).

Professional negotiation training will boost both your confidence and competence in real estate negotiation situations. Trained negotiators can:

- Ask questions different ways to get important information
- Negotiate skillfully to find a win-win solution
- Deal effectively with highly competitive negotiators
- Use proven persuasion techniques to increase success
- Use a planning tool to ensure success
- Negotiate performance bonuses for your clients and yourself
- Have specific techniques to overcome deadlock situations
- Use emotions to influence negotiation outcomes

If you have not already received training in negotiation skills, then you have an opportunity to gain new negotiation techniques and truly be the best agent you can be.

Human beings are generally always learning something, and the more engaged they are in the process, the more useful the new information will be.  The neurons in the brain love to learn, and they can be compared to muscles in the body that love to exercise. 

Neurons become stimulated while learning just as muscles stretch and flex and expand while exercising.  But neurons can also get fatigued just like muscles.  The fatigue happens more quickly when the same patterns of information are repeated again and again, similar to muscles becoming fatigued throughout a set of the same exercise repetitions.

When new concepts are covered in varying ways, however, the brain has a remarkable capacity to interconnect the information and learn at a deeper rate.  Again, this is similar to working muscles throughout a series of different stations – the muscles may feel tired, but they will keep on working if you vary the exercise.

At the Real Estate Negotiation Institute, we understand how much more effective learning negotiation techniques and negotiation skills can be when concepts are presented in a variety of formats.  All of our courses offer a range of interactions with the instructor, with peers, with materials, in large groups, in small groups, and individually.  Listening, reading, role playing, discussions, and examples all work together at the RENI to provide a complete learning experience that leaves the student with a complete command of the subject.

Do real estate professionals really have to know how to negotiate?  The simple answer – absolutely!  When you define negotiation as, “Influencing or persuading others,” then it is easy to see that the real estate professional uses negotiation skills in every real estate transaction.  Negotiation is a life skill, and many real estate professionals simply do not realize how much they actually negotiate every day.  Real estate agents negotiate with their broker, with their clients, with other agents, with third party providers, and on behalf of their clients.

To be successful in business in general, and in real estate specifically, you must continually refine your negotiation skills.  Below is a list of more than 100 different real estate negotiation situations:

Agent with Broker (Owner)
Commission splits
Office space charges
Advertising / co-marketing / lead generation
Office amenities charges (fax, copies, forms, etc.)
Business cards
Lock boxes
Signs and signage installation
“Shoe” deals
Joining brokerage
Retention / staying at brokerage
Assistants Association fees
Answering service
Computers
Types of training and cost
Health benefits
Profit sharing
Floor time
Sign calls

Agent with Seller
Listing appointment
Appointment time and location
Where you sit during the appointment
Discussion topics and order
Getting seller to hire you now
Agency election (seller selection of broker duties)
Listing agreement type (Exclusive Right to Sell/Rent, Exclusive Agency, Open Listing, Net listing)
Duration of listing
Exclusive period and not putting in MLS for period of time
Access, lock box, and showing times
Compensation retainer commission/fee including performance bonuses, sales after expiration period
List price
How and where offers presented (in person by buyer/buyer’s agent, written/oral)
Home preparation/staging prior to home going on market
Marketing/advertising plan (sign riders, flyers, newspapers, magazines, internet, etc.)
Open houses
Home warranty offered to buyer?
Acceptance or rejection of buyer’s offer or counter offer
Multiple counter offers

Agent with Buyer
Get buyer to hire agent
Agency election (buyer selection of broker duties)
Buyer-Broker agreement
Period of agreement
Amount of compensation (including commission / bonus and who pays)
Purchase after termination timing
Retainer fee
Home value expectations (features vs. price)
Initial offer to seller (including multiple offer situations)
Accepting or rejecting counter offer from seller
Buyer inspection notice to seller
Lender fees
Loan documents on time

Agent with Agent (Broker to Broker)
Co-broke / Commissions
Earnest money on contract breaches
Recruiting
Referrals
Fees
Communication requirements
Mentoring / training agreements
Joint open houses
Responsibilities
Prospect ownership
Joint office sharing
Joint assistant sharing

Rainmaker with Team Member
Recruiting / hire decision
Office space
Supplies
Copying costs
Automobile expenses
Fees
Commission splits
Bonuses
Profit sharing
Cap splits
Lead generation
Rainmaker responsibilities
Team member responsibilities / opportunities
Team member training/mentoring
Non-compete terms
Responsibilities / Performance requirements / Expectations Benefits (vacation, health care, insurance, etc.)

Agent with Third Party Resources (Title Company, Lender, Home Inspections, etc.)
Treatment of clients
Co-marketing agreements
Special client rates / fees (e.g. re-inspection fees for home inspection, title fee discounts)
Reciprocal referral agreements

Agent Representing Seller/Buyer with Agent Representing Buyer/Seller
Earnest money
Personal property included or not included in sale
Purchase / sale price
Closing date
Possession date
Financing
Conditional loan approval timing
Appraisal payment timing
Who pays buyer’s discount points
Discount points shall not exceed amount
Who pays ALTA lender title policy
Who pays loan origination fee
Who pays appraisal fee
Seller payment of buyer’s other loan costs
Payments of assessments at closing
Buyer’s Inspection Notice timing and seller’s response timing
Buyer’s inspection issues
HOA assessments and transfer fees
Home Warranty
Termite inspection/treatment payment
Contingencies
Deadline extensions
Title company
Rentals
Special access
Upgrades
Utilities
First right of refusal
Mineral / water rights
Utilities left on for inspections/repairs
Multiple counter offers
Lot survey fees
Environmental inspection fees
Well inspection fees
Septic inspection fees

When an aggressive low ball offer comes through on a real estate listing you represent, often the first reaction is for you and/or your seller to feel insulted.  Recognize that the low ball offer is typically just a tactic to see how the seller reacts.  The listing agent should pre-position the seller to expect low ball offers and not react emotionally, which is sometimes easier said than done.
 
The best negotiation defense to a true low ball offer is a credible list price that can be defended by the market data and/or logical reasoning.  A good “anchor” is credible, defensible, and has staying power.  Sellers who over-list their property invite more aggressive offers from buyers, and sometimes even a reasonable offer will then look low relative to the over-listed price.    

The seller has 3 basic options for a low ball offer: accept, reject, or counter. 

Accepting the aggressive low ball offer is not normally the logical choice.  There may be times when the seller is subject to extreme circumstances, but this is a rare exception.  Even if the low ball offer is accepted, getting to closing could still be difficult with all the negative emotion.

One way to reject a low ball offer is for the listing agent to communicate to the buyer’s agent, “My seller will respond to a reasonable offer from your buyer but not an unreasonable offer that cannot be supported by the market data.”  The low ball offer is still a written offer and often results in an acceptable outcome for both parties.  The seller’s agent needs to role model professional cooperation to set the tone for a reasonable exchange of counter offers in true real estate negotiation. 

Another way to reject a lowball offer is to ask for supporting data.  This puts the buyer’s side on the defensive and focuses the negotiation on credible market-based numbers.

Countering with a slightly lower price can be an effective approach as it signals that the seller is willing to negotiate, but not willing to give the home away.  The seller’s agent must communicate to the buyer right away that the low ball offer is not even in the realm of possibility to ensure that the buyer does not hold out false hope.
 
Whether you are in a buyer’s market or a seller’s market, your real estate negotiation should be based on facts and reason, not emotions and gamesmanship.

Ultimatums are a competitive negotiation tactic, and most real estate professionals have encountered them at some point in their careers.  Of the ultimatums in common use, “Take it or leave it,” is by far the most popular.  It is designed to cause discomfort and put the negotiation off balance.  The ultimatum can include a very short deadline or a particularly unreasonable price, and is meant to create a sense of panic through fear of loss.

An experienced negotiator knows how to handle the ultimatum tactic.  Less experienced negotiators may allow the ultimatum to throws them off balance – the desired effect.  The best reaction is often the hardest to summon:  relax.

Countering “take it or leave it” is no different than countering any other highly competitive negotiation tactic.  Start by calmly asking for the basis supporting the ultimatum.  Why is that deadline important?  What data has been used to set that price?  Gather information that will help you determine what is important to the other party, and continue negotiations to find other options that meet both parties’ needs.

It is possible that the other party might stick to the ultimatum and refuse to negotiate further.  IF that happens, and you have tried to be collaborative without success, you might need to issue your own ultimatum or simply walk away.  But WHEN that happens, you will know that you have tried to reach a mutually satisfactory real estate negotiation agreement without resorting to intimidation tactics.