Salespeople get a tough rep for a specific skill that their very business is built on: negotiation. It's often viewed by the consumer as haggling. The two are very different. Haggling is more the insistent act of bargaining for the sole purpose of price. Negotiations on the other hand create value through communications. The goal is to reach a conclusion that delivers a result beneficial to all parties.
Negotiation is among the most beneficial skills in a realtor’s tool kit.
The real estate industry is a dynamic and competitive field that requires a high level of negotiation skills, particularly when dealing with investor clients on high-value transactions. Realtors are often tasked with the responsibility of ensuring that both parties involved in a transaction achieve their desired outcomes.
Let’s review a few tactics that will be effective in improving your negotiation skills including examples of how they can be implemented in your next transaction.
In short, yes. Negotiation skills are critical for realtors, investors, or any real estate professional who is maneuvering through the market. It's a skill that is developed over time and can determine a real estate professional’s success level. Negotiation skills correctly directly in the success of high-value transactions. The higher the stakes and more valuable the asset, the more each party would like to have and the less they would typically like to give. A master negotiation would be able to level the playing field, help drill down to the most important aspects of what each side wants, and craft an approach that results in both sides of the table being able to claim a win.
The importance of negotiation skills in real estate cannot be overstated, as they can significantly impact the profitability of transactions, client satisfaction, and the reputation of the realtor.
One of the most common forms of negotiation in real estate is the counteroffer. A counteroffer is when a response is given to an original offer that requires the parties involved in the transaction to speak further on requests.
Example: If Party A has an investment property available and Party B places an offer that is relatively intriguing to Party A, but in their eyes could be better with an amended approach, instead of accepting the offer, Party A will respond to Party B’s original offer with a ‘yes, under these circumstances’. The terms of the counter office can range from price, concessions, possession date, specifics of how the transaction is handled, and a host of other things.
So, a counteroffer is an example of a negotiation, but let's discuss the components of a negotiation in action.
Effective Communication is Key
Effective communication is the root of success, so it's no surprise that it plays such a huge role in effective negotiation practices. As a realtor representing a client in a real estate transaction, it is pertinent to articulate the client’s needs. Real estate is a numbers-oriented interaction that could potentially have emotional attachments for one or all parties involved. Considering, it's important to understand that effective communication requires a well-rounded approach to understanding what each side of the negotiation is asking for, and how the realtor’s client can essentially align the course of action with the desires and ultimately the specific goals of the realtor’s client.
Hear Exactly What's Being Requested
It's not uncommon to bypass the true requests in a transaction, especially if dealing with a party who may not value communication or is simply not very good at it. It is pertinent to analyze what are the ultimate needs and interests of both parties. This requires a realtor to conduct thorough research and analysis. For example, an investor client may be interested in a property due to its potential for high returns, while the seller may be more concerned about the timeline of the sale. By understanding these differing interests, a realtor can negotiate a deal that satisfies both parties, such as arranging for a quick sale at a price that ensures a good return on investment for the investor.
Mutual Benefit is The Ultimate Goal
Negotiation done right results in both sides of the table ultimately feeling as if the most important goals have been achieved. In a lot of cases, this can be more challenging than it seems, and can quite well require creativity and flexibility on the part of the realtor.
Example: If a seller is unwilling to lower the price of a high-value property, the realtor could suggest alternative solutions such as a lease-to-own arrangement or seller financing. These options could make the deal more attractive to the investor client without requiring the seller to reduce the price.
Improving negotiation skills is vital for realtors dealing with investor clients, and the more challenging the transactions become the more those negotiation skills will sharpen and be required to be utilized. Remembering that effective communication is the foundation of the process, and the ultimate goal is to ensure that all parties' needs and interests are aligned successfully are key aspects of successful negotiation.
National Real Estate Management Group values client satisfaction and empowers our team to value the same. By enhancing negotiation skills, realtors can ensure the profitability of transactions, increase client satisfaction, and enhance their professional reputation.
Are you looking to learn how to sharpen your negotiating skills? Or, are you an investor looking for a master negotiator to help facilitate your high-value transactions? NREMG can help with that. Contact us today and let’s discuss your real estate needs.