Nov
20
How to Concede Smart–and Avoid These 3 Mistakes
Filed Under Real Estate Negotiation | Leave a Comment
When it comes to making concessions in negotiations, here’s a good rule of thumb: If you are going to concede in the opening rounds of a negotiation, concede small.
In other words, avoid these three mistakes:
Mistake No. 1 - Equal-sized Concessions
If you have a negotiating room of $10,000, don’t give it away in increments of $2,500.
For example, imagine you are selling your house and your asking price is $270,000. You receive an offer of $250,000.
If you counter with $267,500 in the first round, $265,000 in the second, $262,500 in the third, imagine what the other person is thinking: “Hmm. Every time I push, I get $2,500. Why stop pushing?”
Mistake No. 2 - Huge, Final Concession
Let’s say you made a concession of $6,000, then one of $4,000.
You say to the other party, “That’s our absolutely lowest offer. I can’t give you a dollar more.” The problem is the other party has a hard time believing you won’t relent a dollar more when you gave up such huge concessions already.
He’s going to try for more, and when you dig your heels in, he thinks, “Why is he being so difficult? You just made a $4,000 concession and you won’t give me another $1000?”
Making this mistake has the potential for creating hostility.
Mistake No. 3 - Give It All Away Up Front
“Who would do a stupid thing like that?” you ask.
Problem is, people do it all the time. Someone calls and says, “My client doesn’t like to negotiate. So just give me your lowest price and I’ll give you a yes or no.”
Or an agent who looked at your client’s house last week calls and says, “We’ve just located two other homes my client liked equally well. Now we’re just down to the price. We thought the fairest thing to do would be to let all three of you give us your lowest price, then we’ll decide.”
Unless you recognize this ploy, you’ll panic and plead with your sellers to cut the price to the bone, even though the doors to a second round of bidding haven’t completely closed.
The Smart Way to Concede
Although negotiating this way takes time, conceding in small, irregular increments makes it more likely that you will end up with your objective price and both sides of the negotiations will feel happy about the outcome.
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Nov
10
In football, when you want to give your opponent the feeling that you are moving in one direction but planning on going in another direction, you give them a head fake.
That is, you lean your head in one direction…
And once your opponent commits to that direction, you go the other direction.
The same is true in negotiations.
See, there may come a time in your negotiations where you hit a wall and need to break a stalemate.
Or you just want to see if you can get the seller’s to go lower to come in range with your buyers.
Or things have gone south and you’ve lost control of the transaction.
If that’s the case, then you want to give the impression that you are withdrawing the offer without actually doing so, roll out the “Withdraw the Offer” head fake.
Here’s How It Works
Imagine you are negotiating to buy a beautiful home for roughly $300,000. You’ve gone through several days of negotiating on many deal points.
Your client loves the house but the seller’s last concession was still $4,000 above what your client wanted to pay.
So you call the seller’s broker–with your client’s permission–and say that your client is going to have to withdraw from buying the house because he could not make the numbers work to his satisfaction.
You, however, are confident that neither the seller nor the broker would let a $300,000 deal go over a difference of $4,000.
Here’s the deal though: That may be the direction it does indeed go. There’s no guarantees.
But the worse that can happen is the other real estate agent says, “Sorry to hear that. Can’t go any lower,” at which point, because your client is willing to pay the difference, you can return, “Let me talk to my client first and make sure he understands what it means to walk away from this deal.”
Aug
10
In the throes of a housing market meltdown, ridiculous buyer offers are abundant. Here’s an example…
Friend wants to sell his house for $215,000. Buyer wants to buy it. So he offers $185,000. And demands seller pay closing costs. AND throw in a home warranty.
Never mind the insulting low ball offer. The add-ons are absurd. In this case, the seller flat-out rejected the offer.
Sometimes though, buyers come across a little more subtle. Here’s what to do if you find your self in that position.
First, imagine this:
Let’s say that you have sold your client’s house, and the buyers agent asks you if his clients could move some of their furniture into the garage three days before closing. Although you wouldn’t want to let them move into the house before closing, you see an advantage in letting them use the garage. It will get them emotionally involved and far less likely to create problems for you at closing. So you’re almost eager to make the concession, but…
Before you do anything, remember this: no matter how small the concession someone is asking you for, always ask for something in return.
Say to them, “Let me check with the family and see how they feel about that, but let me ask you this: If we do that for you, what will you do for us?”
One of three things is going to happen when you ask for something in return:
1. You might just get something.
2. By asking for something in return, you elevate the value of the concession. When you’re negotiating, why give anything away? Always make the big deal out of it. You may need that later.
3. It stops the grinding away process. This is the key reason why you should always ask for something in return. If they know that every time they ask you for something, you’re going to ask for something in return, then it stops them constantly coming back for more.
Also, lean on the Higher Authority gambit to deflect pressure from yourself. That way you continue to position yourself as on the other person’s side and any negative emotion will be directed away from you. That’s one of the better ways to
Did you find this article useful? If so, leave a comment. And if you like what you read, subscribe to the Real Estate Marketing Blog.
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Jul
14
A question I seem to get a lot lately goes something like this…
I hate to negotiate. But I’m a real estate agent. So, I have to negotiate. How does a conflict averse real estate agents not only negotiate…but negotiate to win?
The answer is simple.
A very rich man once said that getting wealthy wasn’t complex. There were just a handful of basics he had to master.
The same is true with negotiations. Master these six rules of negotiations and you’ll stand to get win-win agreements nearly every time.
1. Start with a Fair Price and Offer
There’s no question that significantly overpricing a home will turn off buyers. Likewise, making an offer that’s far lower than the asking price is practically guaranteed to alienate sellers. It might seem obvious but asking and offering prices should be based on recent sales prices of comparable homes. Make it reasonable. Make it fair.
2. Respect the Other Side’s Priorities
Knowing what’s most important to the person on the other side of the negotiating table can help you avoid pushing too hard on hot or sensitive issues.
For example, a seller who won’t budge on the sales price might be willing to pay more of the transaction costs or make more repairs to the home, while a buyer with an urgent move-in date might be willing to pay a higher portion of the transaction costs or forgo some major repairs.
3. Be Prepared to Compromise
“Win-win” doesn’t mean both the buyer and the seller will get everything they want. It means both sides will win some and give some. Rather than approaching negotiations from an adversarial winner-take-all perspective, focus on your top priorities and don’t let your emotions overrule your better judgment.
4. Meet in the Middle
Can’t decide who will pay the recording fee? Can’t agree on a close-of-escrow date? Arguing over cosmetic repairs? Splitting the difference is a time-honored and often successful negotiation strategy. Pay half the fee. Count off half the days. Fix half the blemishes.
5. Leave it Aside
Politicians and corporate executives are famous for their “for future discussion” agreements. If you have a major sticking point that’s not material to the overall contract (e.g., the purchase of furniture or fixtures), finish the main agreement, then resolve the other difficulties in a side agreement or amendment.
This technique allows both sides to recognize and solidify basic areas of agreement, then move ahead toward a fair compromise on other terms and conditions.
Summarizing the points of agreement in writing is another helpful strategy.
6. Ask for Advice
Successful REALTORS® tend to be experienced negotiators. They’ve seen what works and what doesn’t in countless real estate transactions, and they’ve established a track-record of bringing buyers and sellers together. Consult a trainer about negotiating strategies, win-win compromises and creative alternatives.
Did you find this article useful? If so, leave a comment. And if you like what you read, subscribe to the Real Estate Marketing Blog.
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May
8
Nine Dead-Simple Ways to Persuade People
Filed Under Persuasion, Real Estate Negotiation | Leave a Comment
“Show business is not hard. It’s all just basic Dale Carnegie stuff,” Jay Leno once said in a Selling Power magazine interview.
Easy enough for Leno to say. The thing you should know, though, is that Leno’s back-of-the-napkin statement is supported by decades of smooth, polite and consistent relationship building. And nine easy-to-follow techniques.
1. Try to make a good impression that lasts. That Leno’s everyday personality is nearly identical to his nice-guy image on television doesn’t detract from his success. It adds to it.
2. Get guts. Don’t be afraid to tackle more than you think you are capable of handling. Unless you try to do something beyond what you have already mastered, you’ll never grow.
3. Take the high road. If during a conversation with a client or prospect someone insults you, avoid the temptation to retaliate. One up them, in fact, by responding in praise and affection. “Gee, I’m hurt that that was said about me, especially since I admire <so and so> so much for his family values, etc….”
4. Ignore failure. Failure will come. That’s a given. What you need to do is bounce back as quickly as possible and keep truckin’ as if nothing even happened.
5. Love what you do. When you love what you do, everything else just seems to fall in place. It’s easy to get out of bed, it’s easy to do the hard things.
6. Fake it before you make it. Even if the ink is still wet on your real estate license, give people the impression that you are the best person at what you do.
7. Treat everyone as a potential customer. This is particularly true for real estate: everyone buys or sells houses, and your market is probably made up of the people you run into everyday.
8. Treat your team as if they are stars. Whether it’s your lender, listing coordinator or buyer’s agent, make the people you work for, and who work for you, feel like your world would collapse without them.
9. Give back to the community. Volunteering your time to worthy causes proves that you are committed to the area you live and work in, which, by the way, provides a good way to meet potential customers.
Did you find this article useful? If so, leave a comment. And if you like what you read, subscribe to the Real Estate Marketing Blog.
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Mar
17
Five Proven Tips to Help You Negotiate in a Buyer’s Market
Filed Under Real Estate Negotiation | Leave a Comment
Before the dismal collapse of the housing market, negotiation skills weren’t quite as important as they are now. In many cases, all you had to do was put the house on the market with a reasonable price and get out of the way.
Things have changed. And aren’t supposed to get any better soon.
What you’re looking at now is a more traditional market where buyers have their share of homes to choose from. That means the negotiation game among you buyers has reached a new level of importance.
Here are four tips to help you negotiate in a buyer’s market.
1. Be Informed
I can tell you without exception who always wins in a negotiation—the one who has the most information and uses it wisely. It’s the one tool that’s imperative in any negotiation. Information leads to the right price for a property. It puts details in perspective. It lessens tensions. And it keeps emotions in check.
Take away: Burn the midnight oil and do your homework.
2. Don’t Lower Your Commissions
This is a key point…because in a buyer’s market, many, many REALTORS® automatically put their commissions on the auctioning block.
But if you lower your commission to get a seller’s business…what does that really say to the seller? That you’re easily willing to come down on price—not what a seller wants to hear!
3. Handle Offers with Care
Never flat out reject an offer. Sure, you’ll get offers that you simply can not accept…and that you might even find insulting…but be careful and tactful with how you respond to those offers.
You’ve done your homework to arrive at the asking price, so explain that to those who make offers instead of a flat rejection.
4. Keep a Positive “This-Will-Work” Attitude
Imagine how comfortable you’d be on the operating table with a surgeon who’s sending out vibes that things might not pan out. You’re confidence in that surgeon sinks. And you want to get the heck out of there!
So, in all situations, focus on solutions and persist without exception. No matter how bad things get, think creatively. There really is a solution to every problem. And if you persist and emerge with a solution to a seemingly impossible situation…you’ll look like a super hero.
This is hard. Cause it will take time. You may look like a fool but keep begging for more time.
5. Ask for Help
At any sign of trouble, go for help. Ask an expert, mentor or coach what you should do in a sticky negotiation situation. Better yet, hook up with someone that will support you and ask them to commit to being available for help.
Best yet, hook up with two people: someone from real estate and someone from a different field. The person outside of your industry will be able to give you fresh insight never heard of before.
Did you find this article helpful? If so, leave a comment or subscribe to the real estate marketing Blog by email or news feed.
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Dec
12
Why Breaking This Childish Habit Would be an Ugly Mistake
Filed Under Real Estate Negotiation | Leave a Comment
It’s often not until your child is grown that you appreciate some of their childish habits.
Take persistence, for example. If you have children, especially teenagers, you know that sometimes you may give in to their demands just to be able to get on with your life. The same tactic works quite well in the business world.
Professional Negotiator Peter Stark tells the story of a son who is a master at asking for something over and over again, from many different creative angles, until he accomplishes his goal.
“At one time,” Peter explains, “my son’s major life goal was to own a Nintendo 64 game. He asked for one almost every day for a period of two years.
“His creative questions included, ‘Could I buy it with my own money?’ and ‘Could I buy a Gameboy until I can get the big version that plays on the television?’
“He also asked why other parents I respect bought their kids a Nintendo 64. The questions went on and on.
“I even told him, ‘Nintendo is a dead horse in our house, and if the horse is dead, you should get off it!’
“Refusing to give up, my son creatively asked the following great question: ‘Dad, is it important to you and Mom that I can make quick decisions in complex situations?’ When I said ‘yes,’ he came back with, ‘Great! I think Nintendo 64 helps kids make quick decisions in complex situations.’”
After two years Peter relates that his son finally got his Nintendo 64.
Your Turn
By looking at this example, can you see why persistence is such a successful tactic? Do you understand why hanging in there is so important?
If not, think about this: 45 percent of leads turn into a sale for someone. You want that person to be you. So hang in there–even when you want to lavishly wet yourself.
Leave a comment if this post was helpful or if you have anything you’d like to add. And if you like what you read, subscribe to the Real Estate Marketing Blog.
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Dec
3
Does the thought of negotiating make your throat go dry? Palms sweat? Heart hammer your rib cage? If so, you’re not alone.
But never develop the chops to handle your own in a boardroom and people will eat you alive. Your clients will scold you. And you’ll have a Pollyanna negotiating reputation…which doesn’t result in more business.
In other words, if you neglect to build your negotating skills, your real estate career will be short. Fortunately for you, you can solve your problem–rather quickly I might add–by mastering these six fundamentals.
1. Start with a Fair Price and Offer
There’s no question that significantly overpricing your home will turn off potential buyers. Likewise, making an offer that’s far lower than the asking price is practically guaranteed to alienate the sellers. It might seem obvious but asking and offering prices should be based on recent sales prices of comparable homes.
2. Respect the Other Side’s Priorities
Knowing what’s most important to the person on the other side of the negotiating table can help you avoid pushing too hard on hot or sensitive issues. For example, a seller who won’t budge on the sales price, might be willing to pay more of the transaction costs or make more repairs to the home, while a buyer with an urgent move-in date might be willing to pay a higher portion of the transaction costs or forgo some major repairs.
3. Be Prepared to Compromise
“Win-win” doesn’t mean both the buyer and the seller will get everything they want. It means both sides will win some and give some. Rather than approaching negotiations from an adversarial winner-take-all perspective, focus on your top priorities and don’t let your emotions overrule your better judgment.
4. Meet in the Middle
Can’t decide who will pay the recording fee? Can’t agree on a close-of-escrow date? Arguing over cosmetic repairs? Splitting the difference is a time-honored and often successful negotiation strategy. Pay half the fee. Count off half the days. Fix half the blemishes.
5. Leave It Aside
Politicians and corporate executives are famous for their “for future discussion” agreements. If you have a major sticking point that’s not material to the overall contract (e.g., the purchase of furniture or fixtures), finish the main agreement, then resolve the other difficulties in a side agreement or amendment. This technique allows both sides to recognize and solidify basic areas of agreement, then move ahead toward a fair compromise on other terms and conditions. Summarizing the points of agreement in writing is another helpful strategy.
6. Ask for Advice
Successful REALTORS® tend to be experienced negotiators. They’ve seen what works and what doesn’t in countless real estate transactions, and they’ve established a track-record of bringing buyers and sellers together. Consult a trainer about negotiating strategies, win-win compromises and creative alternatives.
Leave a comment if this post was helpful or if you have anything you’d like to add. And if you like what you read, subscribe to the Real Estate Marketing Blog.
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Jul
28
This negotiating trick is a timeless classic. It’s something Aristotle taught Greek lawyers in 300 BC. And it’s something lawyers are still learning today.
What is it?
Simply asking questions to reveal hidden motives behind a counterpart’s rejection of a deal point.
Why This Negotiating Tactic Is Important
To be an effective negotiator, you have to learn to uncover the real reason behind a counterpart’s resistance. You can’t simply cave in when a prospect or client says no–especially if you are dealing with someone who thinks they have the upper hand, like a buyer.
Here’s an example:
Let’s say Jack is refinancing his home. His mortgage broker itemizes all the charges associated with securing a loan. Jack asks if he could waive the fee for the appraisal since he had an appraisal done six months earlier. He wants to use that appraisal.
The mortgage broker says that getting an appraisal is standard company policy. Her boss would never approve of waiving the appraisal or the fee.
Jack is stumped. But he doesn’t give up.
Expert Negotiators Do This When They Meet Resistance
To find out if there is another reason the broker does not want to waive the fee, Jack could ask to speak directly to the broker’s boss.
If the explanation the broker has given is not exactly accurate, the broker will probably make a concession. In this way, he may call her bluff.
Better yet, if she does let Jack talk to her boss, he may succeed in gaining something he would not have gained–talking to the person who makes the decisions.
What to Do If You Can’t Think of Any Questions to Ask
Imagine you were truly stumped. And couldn’t think of anything to say. What do you do?
Your best bet is to be honest and just say “Are you telling the truth?” Say it with humor or a light tone. Play dumb even. That’s a great tactic.
But you’ll even find those times when this tactic won’t work. Someone’s on a power trip and will waster your time and money. Get out of that situation.
Have you ever used this ancient negotiating trick? Did it work? Leave your answer in the comments.
Leave a comment if this post was helpful or if you have anything you’d like to add. And if you like what you read, subscribe to the real estate marketing Blog by email or news feed.
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Jun
26
Use the Problem-Agitate-Solve Formula for Killer Sales Presentations
Filed Under Real Estate Listing Tips, Real Estate Negotiation, Real Estate Prospecting Ideas | 3 Comments
Pain and problems dominate us. Everyday and every hour we are constantly looking for solutions for our pain and problems.
This holds true for home buyers and sellers. That’s why it’s a great idea to use the PAS formula in your sales presentations.
Whether you’re persuading a buyer to bite the bullet and buy a home or convincing a seller to stake YOUR for sale sign in their yard, you can use the PAS formula to get the job done.
What Is the Problem-Agitate-Solve Formula?
The PAS formula is Dan Kennedy’s darling. Or at least he gets credit for it. Nonetheless, it’s pretty basic.
Identify a problem. Agitate the problem. Solve the problem.
Identify a Problem
Imagine you just met a man at the tennis club. Imagine he told you he lives in a two-bedroom, one bath home with his wife and two kids. Imagine the children as one girl, one boy. Next, imagine the girl 7 and the boy 5. And they share a bedroom.
See a potential problem?
If you do, point out the problem.
You: Hey Stan, are you concerned about your daughter wanting her own privacy?
Agitate the Problem
Once you’ve identified the problem, now aggravate it.
You: Man, that’s probably pretty uncomfortable. You guys are probably looking for a house soon, right?
Stan: You bet. But it’s tough. With the market and all.
You: Yeah, but if you don’t get her own space soon–especially as she gets older–could be a nightmare for all of you. Don’t you think?
Stan: Oh man, yeah.
You: Often one thing can really drive a wedge between a brother and sister–even a family.
Stan: Yeah, my wife and I are really concerned about that.
You: Could be a real problem when she realizes she’s the only 8 year old who shares a room with her brother.
Stan: I don’t even want to think about it.
You: But how can you think about moving when the market stinks and you really don’t know how well your house will sell.
Stan: You can say that again.
Solve the Problem
This is when you trot out your solution.
You: Stan, if you got some time this week, any chance we could get together and I could maybe show you how we could solve your problem? I’ve got some great ideas to share with you.
Stan: Even though I’m not in the market, I think I might be able to swing that.
See how easy and casual that was to set an appointment? Works just as well in any situation.
Conclusion
Use the Pain-Agitate-Solve formula to stop people in their tracks, draw them closer, yearn for your answer and beg for your solution.
Use it during casual conversations or planned-out sales presentation. It doesn’t really matter. Just remember, PAS.
Leave a comment if this post was helpful or if you have anything you’d like to add. And if you like what you read, subscribe to the Real Estate Marketing Blog.
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