Negotiation Effectiveness in Real Estate
In the real estate business, one part of the job description is negotiations. The offer, the counter offer, the back and forth discussions before reaching, "an accepted offer." This is one of my favorite parts of my job as a Realtor in Madison. And for some people it's the most frustrating. As one recent client told me, "my gosh, I don't know how you do this and keep it all straight". Well, I actually think it's pretty fun.
Next week, I will start my third year in the MBA program at the University of Wisconsin and one of my classes is "Negotiations". Sweet!!! Now here's a relevant class that I can really put to use in my real estate career. One book we are reading is titled, "Negotiation for Advantage - Negotiation Strategies for Reasonable People." I started reading some of it and thought I would share four key habits of some of the best negotiators. I will frame these habits around my experience during a home sale negotiation.
A Willingness to Prepare
In making offers and counter offers, often the best deals come from those who best know the market. I have had numerous examples of "good negotiations" when I'm able to use market data and similar property information to make a convincing argument for either buyers or sellers about a certain price. Other negotiations have proved more challenging. In fact, I had one situation where a home seller simply, "did not want to take any less" for his house, regardless of what I said. That's fine. Don't take any less. But before digging those heels in too much, maybe we should look at the market and see what else is out there. Trying to convince a buyer that they should pay more for a property is nearly impossible without taking the adequate time to prepare and research the market.
Research on negotiation reveals a striking fact: people who expect more, generally get more. To improve negotiation results, one should have a full range of "fair and reasonable" outcomes. This is one reason that I don't like to give one recommended price for a home, when I meet with potential home sellers. In my experience, there are many opinions of value and the "right price" is really determined by the market and what a reasonable home buyer is willing to pay at a given time. My goal as a listing agent is to have expectations high enough but also realistic enough to encourage a decent offer with a new home buyer.
The Patience to Listen
If information is power, then listening will give you power. Some of the best negotiators ask questions, test for understanding, summarize discussions, and listen. I have experienced this truth a few times when I failed to listen adequately. For example, there was one time that I didn't clearly communicate a home seller's position to the potential home buyer. The buyer made an offer thinking that the seller would agree to something, when in fact he did not. The problem in this scenario was that failing to listen properly led to an unfavorable outcome and no deal. After that event, I made extra efforts to listen better and reaffirm my clients position both on the phone and via email. As a result, I have found more recent negotiations to be much smoother. Similarly, I have had negotiations with my wife go very poorly when I failed to adequately listen to her side. But that's another matter - :-)
A Commitment to Personal Integrity
Effective negotiators are reliable. They keep their promises, avoid lying, and do not raise hopes that they have no intention of fulfilling. I value my reputation very highly. In the previous example while I learned a tough lesson on listening, I was also very quick to own up to my mistake and clarify my clients position. If I had tried to sweep this error under the rug, it would have haunted me for a long time. I have a strong commitment to personal integrity and in the end, my home seller clients were very pleased with the outcome, even though it did not work out with the previous buyer.
Whether negotiating for a trinket in Mexico or a new house in Atwood, or Dudgeon-Monroe, you will likely have an effective negotiation with the habits of: a willingness to prepare, high expectations, the patience to listen, and a commitment to personal integrity.
Josh Lavik - Keller Williams Realty - 608-234-1523 - joshlavik (at) kw (dot) com.