LESSON 22: Negotiating a sale

Negotiating a sale

Negotiating, like pricing, is a critical area that can cause serious problems for many salespeople. Most of the difficulty seems to come from these general sources:

• Poor training.

• They involve manipulating or tricking one or both parties, or

• They make you a dominant third party in what should be a two-party negotiation.

• Emotion.

The two best rules for negotiating in real estate are:

• Stay impartial.

• Facilitate, don’t manipulate, agreement.

The role of the consultant in negotiations is to Stay out of it!

Rule 1: Staying impartial

Staying impartial means you do not express your personal judgments and opinions,
either in words or in your body language. There are two very good reasons for this:

• Opinion is not fact.

• Credibility. Everyone involved recognises that you have a financial stake in the outcome.

Here are the key steps to remaining impartial:

• Concentrate on the facts.

• Explain the options and possible consequences.

  • Accept the offer as given.

  • Reject the offer.

  • Make a counter-offer.

• Ask for instructions. “What do you want me to do?”.

Do Not suggest a figure or amount.
Do Not suggest or state what the other party will do.
Do Not give misleading or false information.
Do Not encourage or agree with negative personal remarks.

Rule 2: Facilitate agreement

Facilitating is simply taking a consultative approach to negotiating.

A facilitator works with, not at, the parties, and concentrates on building an agreement based on their common interests, rather than playing them off against each other.

There are several very good reasons why this is a better way to negotiate:

• People who are personally involved in the process are much more motivated to reach agreement and much more satisfied with the result.

• An impartial third party is in a much better position to keep negotiations progressing positively and smoothly. Two common scenarios where your impartiality is crucial are:

  • Emotional bargaining.

  • Positional bargaining.

• The consultative approach results in a better relationship with clients because it is based on trust and integrity.

Negotiating a sale

Taking an offer from a buyer

How much do you think we should offer?

Although I’d like to help you, I really can’t tell you what you should offer. That decision simply has to be made by you.

How much will the vendor accept?

Aside from the listing price, I don’t know what the vendor will or won’t accept.

Oh come on; you must have some idea what figure they’ll accept?

No, I honestly don’t know. They may not know themselves until they’re presented with an offer. I make it a practice to never second guess my clients. Doing that helps no one but does have the potential to create a lot of unnecessary problems for everybody concerned.

What about other buyers – is somebody else going to make an offer?

As far as I know, there’s no other offer pending at the moment from the buyers I’ve been working with, but there are a number of buyers who’ve looked at the home with other salespeople. So, I can’t really know for certain if someone’s likely to make an offer but obviously, it’s always a possibility.

Emotional and positional bargaining: suggested responses

These people must think we were born yesterday or just plain stupid if they expect
us to go along with this.

Response:
Not at all. What we do have is two nice families … One who wants to sell and one who wants to buy a home. Tell me, what you would like to do?

Why, that’s almost insulting. It’s no better than highway robbery.

Response:
No one is trying to insult or rob anyone here; we’re simply in the process of negotiation. Let’s have a look at your options and you can tell me what you want to do.

Well, that’s it. We’re not going to move one cent off $xx,xxx, no matter what.

Response:
My concern here is that you’re limiting your options before we’ve explored all the possibilities. Price isn’t the only money factor involved. How about we set aside any hard and fast figure until we’ve looked at all of the options available?

Who do these people think they are? They don’t really want to buy/sell. They’re just dragging this on for no reason. That’s the figure and they can take it or leave it.

Response:
It isn’t really a question of whether they want to buy/sell. Very often, negotiation takes much longer than we expect it to. That can make anyone feel quite frustrated but I wouldn’t want that to cause you to lose sight of what you’re really trying to achieve here, because that’s what’s most important.

Price is the most obvious financial factor, but not the only one. Why don’t we look at some of the other things, like the deposit, possession date and chattels, because it may be that you can accomplish what you want by just taking a different avenue to get there.

If they don’t give us an answer by 5 o’clock, then the deal’s off. We’re tired of playing
games.

Response:
I can understand how you feel. Waiting can be hard but unfortunately, it’s often part of negotiating. Sometimes people are tempted to force an issue, not because they really feel it’s best, but because they feel frustrated. It’s an easy trap to fall into but it’s all too often counterproductive and accomplishes the exact opposite of what you really want to achieve. 

Negotiating a sale 2

The last little gap

A problem that occurs in many negotiations is the ‘last little gap’. In real estate, it’s usually over money – where negotiations seem to come to a halt just when the parties are only a few thousand dollars apart.

In most cases, you would use this method with a vendor. But, depending on the circumstances, you could also apply it to a buyer.

Here are two options:

1. Describe the reality of the situation.

2. Focus on where the vendor really wants to be, not where they currently are.

The decision is still theirs but by projecting them into the future, you can show them how holding out for a relatively small sum can move them away from their goal, not closer to it.

It’s not over until…
It’s never over until everyone has said “no” twice! This is a very important part of successful negotiating. Sometimes people say “no” not because they will not change their position, but because they believe or hope it will force the other party into changing theirs first.

Bridging the last little gap: suggested responses
Your vendors have refused the buyers’ last offer, and you have returned to relay this to the buyer:

“I’m sorry, but the vendors don’t feel they can accept your offer. What would you like to do?”

The buyers say that is their final offer and they will not alter or increase it. You have returned to relay this to the vendor:

“I have explained your position to the buyers, but they don’t feel they can change their offer. What would you like to do?”

If the vendor still says “no”, they have said “no” twice. But you still need to return to the buyer once more:

“I’ve explained your position to the vendors, but they still don’t feel they can accept your offer. What would you like to do?

Find some one to role play the negotiation situation with.

There are three role plays in this exercise:

• Taking an offer from a buyer

• Presenting an offer to a vendor

• Negotiating an offer with the buyer and vendor

Click here to download instructions for the exercises, support documentation and the negotiation checklist.

The additional material below contains helpful and extended information on today’s activities.
Although not required to be completed before proceeding to the next day we highly recommend them.

CLICK on each activity to begin

Scripts and dialogues on negotiation

Scripts and dialogues on negotiation 1

Scripts and dialogues on negotiation 2

Scripts and dialogues on negotiation 3