Carol Staab
Associate Broker
Douglas Elliman
111 Fifth Avenue
New York , NY 10003

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11 Tips For a Successful Real Estate Negotiation

Real Estate Negotiation

Knowing basic human nature can help set-up a better real estate negotiation.

The right strategy, tactics and mastery of real estate negotiation skills are necessary to get a deal done. I have read numerous books, have taken many courses on negotiation including the Harvard program and have honed my real estate negotiation skills in countless real estate transactions over my 24 years in the industry.

11 Tips To A Successful Real Estate Negotiation

  1.  If you own a co-op the highest offer may not be the right offer! Make sure that your buyer has the right profile for the board.
  2. Don’t reject offers just because they seem too low! Recently I had a case where the buyer came in at $2.9M and finished with an over-priced offer of $3.6M.
  3. Three very important goals in a negotiation are trust, rapport and satisfaction. Trust is crucial to all relationships. Rapport is beyond trust. You need to be tuned into the other person. Both sides need to have a sense of getting something they can live with and a sense of satisfaction.

    Additional tips achieve trust, rapport & satisfaction:

    • Find common ground with the other side.
    • Establish a good rapport.
    • Be a nice person to deal with.
    • Find the appropriate level of communication.
    • Understand the other side and its needs.
    • Cement feelings of trust.
    • Learn flexibility.
    • Be a deal maker not a deal breaker.
  4. The “Secret Sauce,” have a strategic game plan and prepare ahead of time! Most people don’t do this and wing it! The more you know, the more you find out about ahead of time and during the negotiation the more control you have over the outcome. Get the answers to these questions!
    • What are you planning to say?
    • How are you going to react to what the other side says?
    • What will you say if the negotiation comes to a standstill?
    • What concessions are you willing and able to make?
    • What do you expect from the other side?
    • Who will you be negotiating with and what motivates them?
  5. Don’t believe everything someone writes or says. Things are seldom what they seem.
  6. Don’t assume the other side knows what you know! They are going to operate on a series of assumptions. Don’t just give away information needlessly that could hurt your outcome of the negotiation.
  7. Beware of the aura of legitimacy whose purpose is to convince you not for you to question it. It can benefit you also. For example your attorney sends out a standard REBNY contract. It has the aura of legitimacy however your attorney may have made changes where the buyer may be unaware.
  8. Identify the key players in the negotiation. Is it the husband, wife both or a corporation? You need to know about the broker on the other side …reputation, style, experience.
  9. Three things you must know about the other side.
    • Constraints– Could be a divorce, child on the way, relocation, just sold their home and need to move quickly
    • Motivation – Are they motivated or do they have no sense of urgency.
    • Negotiating weaknesses – These tell you a great deal! These can be uncovered with some casual questions. Some brokers will literally lay all their cards on the table. Some are unable to focus on the details only the big picture. Uncover the weaknesses by asking oblique questions such as When do you want to close? Do you plan to pay all cash or finance? Do you have plans to renovate? What if I threw in some furniture would that change things?
  10. Control the pace of the negotiation –a quick negotiation often ends with one person feeling unhappy. Successful negotiations involve satisfying the ego requirement of both sides and that takes some time. If you see the other side is weakened by going slowly then pick up the pace by all means!

    Here are 3 ways to control the pace.

    • Don’t accept an offer right away! If the buyer thinks it was that easy then he or she may regret their decision.
    • Do be indecisive. – Use indecision as a tactic when needed to control the pace. I.E. “I don’t know about that. Let me think it over and get back to you.”
    • Don’t do quick negotiations unless necessary. If necessary you must be better prepared and know a lot about the other side.
  11. Human nature ultimately determine how deals come together and how deals fall apart! Here is what you need to know about the psychology of negotiations.
    • People want what they can’t have or what someone else wants! That’s the beauty when you have multiple bidders for example.
    • People become overwhelmed when faced with too many decisions. Don’t give buyers too much information or things to consider.
    • Aiming high and holding back gets results. Don’t present your best offer too early or give too many concessions early in negotiations. Master patience and strategic thinking.
    • People have an innate fear of superiority of negotiators that are more experienced and more powerful. If this is the case then the key is to build rapport with the other side and make them feel equal.
    • Dumb Is Smart – things are not always what they seem. People might play dumb to gain more from you. Remember two can play that game!
    • Everybody loves something for free! Smart negotiators can always throw something in to sweeten the deal. For IE. If you accept my price or sign the contract this week I will throw in these fixtures or some pieces of furniture.
    • People believe that one good turns deserves another! It is the “if I do something for you such as concede a negotiating point then you need to do something for me.
    • The power of the simple solution! Such as ‘let’s split the difference” Of course only do this if it is to your benefit.
    • Let’s discuss this later! When a negotiation becomes heated. Put that point aside and go on to the others.
    • Let’s think outside the box. This likely to get a positive response.It helps get people unstuck and move towards a solution.
    • The invested time philosophy. If a buyer has invested a lot of time and emotion in negotiations compared to you then the buyer will want to try to close the deal. He or she doesn’t want to think they wasted a lot of time and energy spent on the negotiations and lose.
    • People tend to dwell on their own power limits. People are aware of their own constrictions. The most common one is time.