Whether you’re a buyer, seller, or real estate agent, mastering negotiation skills is crucial to achieving your desired outcomes. Negotiation is a delicate dance where one party proposes, and the other responds.
David Goodnight, who has developed major infrastructure, commercial real estate, and energy assets across the globe for the past 25 years, shares seven ways to negotiate like a pro in real estate transactions and help you close profitable deals.
1. Be Prepared:
You’re bound to lose if you’re entering a negotiation without adequate preparation. You need to know your strengths, weaknesses, and boundaries to negotiate successfully. Research comprehensively about the property, the market, the homeowners, and the neighborhood. Gather any documents that can support your claims. Know what you want and be willing to walk away if you can’t get it. Being prepared gives you confidence and control in the negotiation process.
Additionally, it’s essential to understand the state and local regulations that govern real estate negotiations. Familiarize yourself with the rules of disclosures, fair housing laws, zoning regulations, and more. If you need help understanding these rules, consult a lawyer or an experienced agent.
2. Listen More, Talk Less:
One of the biggest mistakes people make in negotiation is talking too much. Listening to the other party and understanding their needs and interests is crucial. Communication is a two-way street; you can’t achieve a fair resolution if you’re only focused on your agenda.
Listen actively and respectfully to what the other party has to say and incorporate their needs into your proposal. This simple act shows that you’re willing to compromise, and win-win solutions are more likely to be reached.
3. Build Rapport:
Building a positive relationship with the other party can make the negotiation process smoother and more productive. People are more inclined to make concessions if they feel good about the person they’re dealing with.
Find common ground, take an interest in their lives, and be respectful and friendly. But be careful not to cross over into personal territory, as it can make negotiations emotional and unprofessional. One way to avoid this is to maintain a formal tone throughout the process.
4. Offer Creative Solutions:
Having an open mind and offering creative solutions can break a stalemate in a negotiation and lead to a win-win outcome. Think outside the box and propose unconventional approaches that may satisfy your and the other party’s interests. Be bold and creative without sacrificing your priorities.
A creative solution can differentiate you from other parties and increase the likelihood of successful negotiation. For instance, a seller may agree to rent the house for a certain period before handing it over to the buyer.
5. Make The First Move:
The first number mentioned in the negotiation sets the tone and the range for the negotiation. Negotiators who offer the first proposal generally end up with better outcomes. If you can, propose a realistic and anchored offer that sets your aspirations high but not so much that it becomes unattainable. The first movement lets you guide the conversation in your favor and can increase your power in the negotiation.
You can also use the ‘anchoring’ technique to your advantage. Anchoring is a cognitive bias where people rely too heavily on the first number they hear, often making decisions based on it. When proposing an offer, give two high and one low number to anchor the negotiation in your favor.
6. Leverage Your BATNA:
Your Best Alternative To a Negotiated Agreement or BATNA is the course of action you’ll take if the negotiation fails. Knowing your BATNA gives you confidence and leverage in a negotiation by convincing the other party that you have viable alternatives.
Establishing a BATNA before going into negotiations and ensuring you’re comfortable with it is essential. No one wants to walk away from a deal without any other options. For example, if you’re buying a property, your BATNA could be that you’ll look at other properties or rent an apartment.
7. Keep Emotions in Check:
Negotiations can be nerve-wracking and emotionally charged, but keeping your emotions in check is crucial. Emotional reactions can escalate tension and damage the rapport you’ve built with the other party. Stay calm, collected, and composed. Take time to think before responding to the other party’s proposal. This simple act can give you control over the negotiation process and increase your chances of achieving your goals.
One way to keep emotions in check and stay focused on the negotiation is to practice visualization. Visualize a successful outcome for yourself and focus on that outcome during the negotiation process. Visualization can help you keep your composure and stick to what’s important in the deal.