All too often in a real estate negotiation, both sides hide their real interests from each other. In competitive bargaining, the Buyer’s Agent and Listing Agent spend too much time arguing “positions” and trying to convince the other side that they are wrong or unreasonable. Skilled, collaborative negotiators know focusing upfront on the needs and interests of each party increases the odds of a direct hit on each other’s target.
The earlier each side understands the other side’s needs and interests, the better. When representing the Seller, a Listing Agent should make the Seller’s needs known to the Buyer upfront in the MLS remarks. For example, in a Buyer’s market the Listing Agent could write “Seller priced to sell, flexible on closing date and personal property, and willing to contribute to Buyer’s closing costs with acceptable offer.” No confidential information is exposed and the tone of cooperation is established. Prior to writing the Buyer’s offer, the Buyer’s Agent should have a dialogue with the Listing Agent to confirm the Seller’s needs and priorities. The Buyer’s Agent might say “Can you tell me what’s really important to your Sellers in this transaction?” The Listing Agent might then respond “My Sellers need a fair price for their home, and at the right price they can help with the Buyer’s closing costs. They prefer a 30 day COE and are willing to consider throwing in the refrigerator, washer, or dryer with a fair price. For protection in this down market, the Sellers would also like for the Buyer’s earnest deposit to go hard after 15 days from signing the contract.” Note that in expressing your client’s needs and desires, you put various value elements on the table for further consideration. If something is a must have, then you communicate that to the other side emphatically, e.g. “We must close by XX date.” If the Buyer’s Agent presents the Buyer’s offer to the Seller and/or Listing Agent, the Buyer’s needs and desires should be made clear to the other side.
As a Listing Agent, how do you clarify the needs and desires of the Buyer? First, the Listing Agent could require the Buyer’s Agent to present the Buyer’s offer in person to the Seller and Listing Agent simply as an opportunity to clarify the Buyer’s needs and desires as well as to potentially explore options and alternatives. If the Buyer’s Agent faxes over the Buyer’s offer without any prior dialogue, the Listing Agent can call the Buyer’s Agent to “clarify” the offer. During this discussion, the Listing Agent can say “Help me understand what’s really important to your Buyer.” Then the Buyer’s Agent might say “Given the market, my Buyer wants a great purchase price and help with the closing costs. He would also like the refrigerator, washer, and dryer and is willing to have his earnest deposit go hard after 20 days in return for the personal property. Additionally, my Buyer would like a decorating allowance of $XXX to replace the worn carpet on the first floor.” Now the Listing Agent can report back to the Seller with meaningful information that can be taken into consideration by the Seller.
Exchanging needs and desires allows each side to consciously consider important factors in their offers / counter offers to the other party. Without clarification of needs and desires, each side “shoots in the dark” until they hit the target. Spotlighting your target for the other side increases the likelihood of a direct hit!
Tags: negotiation
