Negotiation is both a science and an art. It, like any other art, requires practice. And, like any science, it necessitates research. Many people struggle with real estate negotiation at first. Many homes don’t need it: you submit an offer with earnest money, and the deal is either approved or rejected.
However, if you want to represent high-end properties, venture into commercial real estate, or advance your career, you’ll need to know how to negotiate effectively.
Let’s look at some of the most efficient real estate negotiating methods that have benefited me in my business and will undoubtedly help you if you’re looking to acquire an investment property or sell a luxury estate.
Know What You’re Doing
You should know everything there is to know about the property and the surrounding region before even starting talks.
Is it true, as the agent claims, that “the comparables for this home are all significantly higher?”
You wouldn’t know until you looked up your knowledge. The more information and resources you have on your side in a negotiation, the easier it will be to assess whether you’re receiving a decent bargain.
Remember that real estate talks can move swiftly in some places. You should never be caught off guard in a situation.
Allow Them to Initiate the Conversation
Not being the first to list a number is a general negotiation approach in many industries.
In real estate, though, you do not have that luxury. You’ll need a listing price if you’re assisting someone with a sale. If you’re helping someone with a purchase, you should make an offer to the buyer.
However, during the negotiation process, you should let them speak first.
When they speak, you’ll get a sense of how serious they are about sticking to the current agreement — and how much convincing they’ll need.
Always Have a Backup Plan
If you don’t have a backup plan, a real estate purchase becomes a hostage situation.
It’s critical to have a backup plan. Other offers should be coming your way if you’re representing a seller. If you’re representing a buyer, you should know what other properties they’re looking at.
Being an agent is challenging since you are not representing your interests. You’re on behalf of someone else.
You have a fiduciary duty to your customer, which means you can’t negotiate against them, even if they could be better served elsewhere.
So, outside of the bargaining process, you can practice your negotiating abilities by providing your seller or buyer extra options. If your seller or buyer feels like they’re up against a brick wall, you may not have done enough to represent them.
Be Prepared to Exit the Room
Preparing to walk away is one of the most critical real estate negotiation techniques.
But, as previously stated, you must confirm that your buyer or seller is willing to walk away – they are, after all, the boss unless you’re buying or selling for yourself.
Spend some time with your client. Real estate agents must educate their customers on what is available and what they should or should not do as part of being skilled advocates.
When attempting to purchase in a completely seller’s market, one must be realistic. You don’t want your clients to be robbed if they could wait a year – it may put money in your pocket now, but it will hurt your reputation later.