Negotiation | Real Estate Negotiation Institute

Posts Tagged: negotiation

Could You Have Negotiated Better?

Tuesday, March 27th, 2012

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.

How the Brain Learns and the Impact on Training

Monday, February 27th, 2012

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.

Countering the Low Ball Offer

Tuesday, January 31st, 2012

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.

Uniqueness Persuasion Principle

Thursday, October 27th, 2011

The second in a Series of Persuasion Principles offered by the RENI, we examine the Uniqueness Persuasion Principle in this article. The principle of uniqueness states that people are more likely to do something if they perceive that there is an exclusiveness, scarcity, or special quality that is worth obtaining. Real estate negotiators should apply this principle when presenting their own services to potential customers as well as when presenting properties to buyers or offers to sellers. Offering something special at a great value is a very effective way to persuade.

When presenting your value to a potential customer or client, you can employ the uniqueness principle to help highlight your level of skill, accomplishment, and training. Those who have successfully completed the CNE course, MCNE program, or other specialized negotiation training offered at the RENI are in the top 10% of real estate professionals in the nation. Since negotiation is the top skill desired by clients, your services uniquely qualify you to satisfy client needs in a meaningful way.

When showing properties or presenting offers, make use of the uniqueness principle to point out features of the home or qualifications of the buyer that make them a rare find, an exclusive deal, a must-have, or a one-of-a-kind opportunity. Helping the seller create a unique listing (ideally you are the most unique listing in the neighborhood) or helping the buyer create a unique offer (especially in a multiple-offer situation) provides significant value for the client.

Successful real estate negotiation often makes use of many negotiation techniques altogether. The next post in this series will be exploring the Contrast Persuasion Principle use for successful real estate negotiation.

Negotiation and Persuasion – Same or Different?

Thursday, September 15th, 2011

Some people think of negotiation and persuasion as the same thing. While persuasion can be an effective negotiation technique, they are distinct activities.

Negotiation can be defined as two or more people interacting to reach agreement on one or more issues, also to confer with another party to arrive at a settlement.

Persuasion can be defined as the act or process of influencing, also to move or urge – by argument or entreaty – to a new belief, position, or course of action.

Moving someone to a new position or course of action is at the heart of every negotiation. This is particularly true in real estate negotiations where two sides are striving to arrive at a settlement. While anyone can attempt to negotiate, an effective persuasive negotiator will usually be more successful.

Discussing persuasion as a negotiation technique means examining the different types of persuasion principles that apply to real estate transactions. In real estate negotiation there are six distinct persuasion opportunities: self-interest, uniqueness, contrast, exchange, sameness, and sound logic.

The RENI will be publishing a series of blog posts that covers each of these principles in depth. Check back often to read the latest in persuasion principles for successful real estate negotiation.

When Your Seller Wants to Over-List

Wednesday, August 31st, 2011

As a real estate professional you know that over listing a property is almost always non-productive. If your comparative market analysis shows that the fair market value is significantly lower than the list price, then few buyers will bother to view the home or make an offer.

The challenge is helping your seller to see the benefits of a more reasonable price. As with most negotiations, the most successful outcome will be achieved when you are armed with facts that help neutralize emotions. The first step is to determine why the seller seems set on the higher price. Generally these reasons fall into a few broad categories:

- Worry about negotiations/having to compromise on a low price
- Unrealistic view of home strengths and weaknesses
- Desire to recoup the costs of renovations
- Significant need for money/financial relief
- Not motivated to move

All of these reasons have an emotional basis and it is important to acknowledge the concerns. Using current market analysis, you should be able to demonstrate that a more reasonable price would address nearly all of these concerns since shorter time on the market is the best financial outcome for the seller.

- Create a balance sheet – real dollars and cents to your seller – of the costs in sticking to a high price and show that those costs will never be recovered if no viable offers are received.
- Estimate the net proceeds of the sale so that your seller will have a concrete incentive to work towards.
- Show your seller that over-listing actually helps the competition (other sellers) which is a significant disadvantage.

And if the seller still resists setting a more reasonable price,

- Persuade them to agree on a scheduled length of time for the high price as well as the lower amounts and durations of stepping the price down to something more reasonable.