9 Top Real Estate Negotiation Strategies
In our day-to-day business we engage in negotiations and it is no different when it comes to real estate. Negotiation plays a major role when it comes to real estate transactions.
In our day-to-day business we engage in negotiations and it is no different when it comes to real estate. Negotiation plays a major role when it comes to real estate transactions. Negotiation is an art just like any other and it therefore requires skills and strategies in order to be carried out successfully.
1. Always use market value instead of asking price as you're starting point.
This strategy involves calculating the value of a property. This rather than asking the price is the starting point for negotiations. There are those who always want to low ball, making an offer that will never be accepted. That is never as good a strategy because the only thing it reveals is the sellers position. Always offer just below what the minimum seller is likely to accept. By doing so the seller will be forced to make a decision to accept just a little less than their minimum but if not, will be forced to counter aggressively to not turn away a strong buyer.
2. Try to have more data than the other side.
When it comes to real estate it's all about location, location, location. When it comes to negotiations it’s all about data, data, data. Always carry out research and have reliable data and information and use this information to leverage it to your advantage. The goal here is to have more information than the other side. The more information you have the more likely you are to win the negotiation.
3. Use price anchoring to find the lowest price.
This is a very effective negotiating strategy. This occurs when you intentionally give a lowball offer or rage to a prospect to change their perception of the financial aspects of the deal. Typically this will get a prospect to go right to their bottom line. An example of this,
Brian: Hey John, I'm taking a look at the numbers and don't kick me out here, but our initial glance is somewhere around Ksh.450,000
John: Brian I told you I wanted 750,000. No way 450,000 works! I won't take a penny less than 500,000.
4. Never underestimate the power of truth.
Just as the saying goes the truth will set you free. It also applies when it comes to negotiating. Truth in a real estate transaction tends to set every party free to make informed, quality decision that inch everyone steadily closer to the closing table.
5. Learn what the other party needs from the deal.
Here we are not looking at it from a point of buying and selling but rather what will satisfy the other party and the two of you to walk out with a win-win situation. You can do this by asking questions of the agents and praise the good points of the property or the nice character of the buyers if you've met them. Put together the best deals so that the closing is smooth and successful.
6. Always negotiate by phone or social media before committing anything on paper.
In this day and age, everything is done digitally, this is also the case with real estate before meeting the in-person first start talking and negotiating in social media as this will help you get acquainted with the person and also give you a perspective on what the person expects and after this early talks, you can meet and talk more about the property.
7. Try meeting the seller in person.
Always make sure you meet the buyers or sellers in person. As discussed above calling and social media conversations are good for creating a rapport. But scheduling an appointment is critical to ensure smooth negotiations. When looking at multiple offers, the sellers only choose the highest price offer when there are no other factors to compare them against. The seller's first choice is usually someone they like so if you have a chance to talk to them and find some things in common, you're in a better negotiation position.
8. Make them think yes was their idea.
No one usually likes to be told to do something. As a negotiator the best thing you can do is to encourage the other party to think they are in control and the best way to do so is by offering them a quick way out. For example when you say, ”You will probably refuse, but ……” leads to an increase in compliance.
9. Keep your cards close, but try to stay nonchalant.
This technique is usually employed whenever there is a buyer's market. This simply means you should always remain relaxed and by doing so you will ensure the listing agent knows that you have the option and in addition to this do not let the listing agent think that that is your favorite home.
The list of tactics and strategies that can be employed in real estate negotiations are numerous sometimes it's all about knowing which one works best for you and exploiting it whether you are a buyer or seller.