Real estate transactions can be challenging. On one side you have sellers who want the highest price whilst on the other are buyers who want to pay the least possible. There is also a legal aspect to consider like conveyance issues, and sale agreements, among others. Top real estate agents use the following negotiation strategies to walk away with a deal that both sides will be happy with.
Negotiation is essentially an exercise in communication. According to Gengo, non-verbal communication has more impact on conveying meaning than the words a person uses. Meeting in person can help ensure that your message does not get lost in translation.
Trust and rapport often lead to better deal outcomes. According to negotiation skills training experts, both trust and rapport are easier to build in person than through a screen, such as through text or email. Also, when you’re trying to persuade someone, being face to face tends to be more effective.
Take time to do research
When you walk into your next negotiation, you want to be in the strongest negotiating position possible. Information is the best way to strengthen your position. Also, depending on market conditions, the buyer or seller may have to act quickly. Access to the right information ensures that both the buyer and seller can make informed decisions.
Often, the more information you have, the better you can negotiate. So, before your meeting, gather any information that could influence decision-making. For example, when a real estate agent is working with a seller, they may want to look up recent sale prices in the market. They can visit the property in person and inspect the features that influence the value e.g. additions and upgrades. Also, they can take note of the amenities in the area.
Include an escalation clause in your offer
An escalation clause – also called an escalator – can make a buyer’s offer stand out. Specifically, it notes the buyer’s intent to pay a certain amount over a seller’s highest offer up to a certain point.
Here’s an example of an average escalation clause:
The buyer in a respective deal offers to pay $____ for the property. In the event that the seller receives a bona fide offer that exceeds the initial offer, the buyer is willing and able to increase the price to $____ above the amount of the initial offer, up to $____.
Qualify buyers and sellers early
Real estate negotiations take time and effort, so you want to be careful to not waste either needlessly. One way to do this is by qualifying potential buyers early. That way you’ll be able to separate the serious buyers from those who are just window shopping.
The most effective way to qualify buyers is to ask questions early. The best questions to ask are those that can help you determine the prospect’s readiness and ability to buy the property. Here are some examples of questions you can use to find leads that are most likely to convert:
- Why do you want to buy?
- Do you have a mortgage pre-approval letter? If yes, when does it lapse?
- Do you need to sell before you buy? If yes, have you listed the property on the market? Have you received any offers? How long have you been trying to sell your property?
Use market value instead of asking price as your starting point
Every negotiation needs a starting point. Real estate skills training courses say that point should be the property’s market value. Market value refers to the amount that the property is worth based on sales prices of similar properties in the area.
Knowing a property’s market value allows your buyers to offer a competitive price. They are also more likely to come across as a strong buyer if they present an offer that is close to the property’s market value. Finally, knowing a property’s market value will also keep the buyer from overpaying.
Develop emotional intelligence
Buying and selling property is a big event in most people’s life. Major life events can be stressful and cause emotions to run high. These moments carry a great deal of emotional significance, and it’s times like these when an estate agent has the very important task of ensuring that the process runs as smoothly as possible.
Emotional intelligence means being able to understand and control your own emotions and reading the emotions of others, both verbal and non-verbal. One way to develop your emotional intelligence is to pay attention to body language. Another simple way to get a read on the other person is to listen carefully to what they’re saying and pay close attention to how they’re saying it e.g. their facial expression, tone of voice, and hand gestures.
In many cases, a successful negotiation resolution depends on the relationship between the people involved. If they have a good relationship, they are more likely to trust each other and be able to find mutually acceptable solutions. Also, according to research by The MarketWatch Centre, negotiators can claim up to 42% more deal value by building relationships.
Negotiation trainers say one of the best ways to sharpen relationship-building skills is to find common ground. It is also important, to be honest, and respectful. Showing a willingness to go the extra mile can help build trust. Open, frequent, and tactful communication is also key to building credibility and partnership.
We hope you found this blog post on Top 7 Real Estate Negotiation Strategies from the Pros useful. Be sure to check out our post How To Be Successful As A Realtor: First Year Tips for more great tips!
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