Negotiating: Deliberate Dialogues for Real Estate

Negotiation: DELIBERATE DIALOGUES FOR REAL ESTATE

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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Agenda §

Foundations of Negotiating

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Characteristics of a Great Negotiator

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Becoming a Great Negotiator

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Classic Tactics for Negotiating

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Working with Other Agents

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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WHAT IS A NEGOTIATION?

“To reach an agreement such that all parties have their needs satisfied to the degree that they are internally motivated to fulfill their commitments and to enter into subsequent negotiations and transaction with the same party.”

-Gerard Nierenberg

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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BENEFITS OF GREAT NEGOTIATION SKILLS

More referrals

More money

More marketing

Higher productivity

More listings

More buyers

Higher total compensation

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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Foundations of Negotiating

NEGOTIATING SITUATIONS

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SINGLE-POINT NEGOTIATING SITUATIONS • Garage Sales • Flea Market • Antique Shop

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MULTI-POINT NEGOTIATION This situation is more like a game of chess.

Each party has multiple opportunities to ‘play’ and should always be considering, if I do this, they’ll likely do that…

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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IN A MULTI-POINT NEGOTIATION THE GOAL IS…

“to reach an agreement such that all parties have their needs satisfied to the degree that they are internally motivated to fulfill their commitments and to enter into subsequent negotiations and transaction with the same party.”

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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Foundations of Negotiating

QUIZ: UNDERSTANDING DIFFERENT NEGOTIATING STYLES

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DISCOVERING YOUR NEGOTIATING STYLE 1.) When you hear that you will have to be a part of a negotiation, what do you look forward to?

A. Satisfying the needs of the other party and maintaining relationships.

B. You don't look forward to negotiations because you don't like conflict.

C. Finding creative solutions to satisfy both parties.

D. The challenge and an opportunity to win.

E. Finding solutions that are fair to both parties.

2.) When initially meeting the other party, you...

A. Take time to connect on a personal level, as you want to set a positive tone for the negotiation.

B. Stay quiet and pass opening negotiations on to another member of the team.

C. Strive for mutual gain using open and seeking questions to determine the other party’s needs.

D. Quickly present your information. You have little time for formalities before getting down to business.

E. Listen to the other party’s proposition before presenting your own.

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DISCOVERING YOUR NEGOTIATING STYLE 3.) During a negotiation, how do you communicate with the other party?

A. In a friendly and eager to please manner. You find common interests to talk about, such as the weather, etc.

B. In a passive manner, and you tread with a great deal of caution. You may attempt to shift responsibility to another person in your team.

C. In an open and honest manner. You are focused on finding imaginative solutions through the use of logic and thorough research.

D. In an assertive and direct manner. You focus on the task at hand, so initial openings and greetings are no more than cursory.

E. In a fair manner but eager to close the deal.

You happily trade one thing for another.

4.) If a negotiation is not going well, you...

A. Attempt to smooth over differences to satisfy the needs of the other party. Likely to concede to accommodate the other party.

B. Get frustrated and feel that you are being personally taken advantage of. You are inclined to walk away from the negotiation.

C. Focus on the available data to look for suitable alternatives to achieve the desired outcome.

D. Focus on strategies you can use to achieve your desired outcome with no concern for the other party.

E. Aim to find middle ground and secure the deal quickly, even if you end up agreeing with less than you wanted.

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DISCOVERING YOUR NEGOTIATING STYLE 5) Are you confident negotiating alone, or do you prefer a team?

6.) When tempers flare, how do you deal with the situation?

A. You want to be involved, but in the periphery, befriending the other party and gaining useful insights.

B. Prefer action behind the scenes and passing the physical negotiation process to others in the team.

A. Seek to mend personal fences by any means possible. This could be by changing the subject or injecting humor into the negotiation.

B. You feel threatened and vulnerable, which may cause you to shut down and delay any kind of decision.

C. Much prefer working in a team to brainstorm ideas and share suggestions.

D. Prefer negotiating individually because you trust your instincts and ability to adapt your strategy to the situation.

C. Try to diffuse the situation exploring new and alternative solutions for consideration.

D. Reiterate and reinforce why this course of action is a good one in order to force the other party to agree.

E. Prefer group situations, but willing to take the lead or indeed any other role if needed.

E. Suggest both parties go over the decision again calmly, and then discuss their issues.

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DISCOVERING YOUR NEGOTIATING STYLE 7.) What situation would unnerve you or make you lack confidence?

8.) At the conclusion of a negotiation, you...

A. Care about what the other party thinks about you and want to end the negotiation on a positive note.

A. If the other party is highly competitive and aggressive, it becomes difficult to build a relationship with them.

B. Many things unnerve you in negotiation. Aggression from the other party, conflict between team members, lack of preparation time, amongst others.

B. May crack under the pressure and make the final concession.

C. Make sure both parties have their goals met, which could take longer than desired.

C. The essence of loyalty and trust being questioned or challenged. This could be through a change in direction, vision or outcome by the other party.

D. Are more concerned about whether you have achieved your goals over the other party.

E. Are concerned that the other party feels the final outcome was fair.

D. You tend not to get phased by negotiation situations as you have confidence in your ability.

E. Better planning by the other team would make you feel unnerved, which might make you rush the negotiation process.

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RESULTS

Count the number of times you selected each letter.

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Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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A’S = ACCOMMODATING

• Your main concern while negotiating is preserving relationships.You like to connect on a personal level, and you would be put out if the other party wasn't interested in also building relationships.

• It matters to you what the other party thinks of you.

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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B’S = AVOIDING

• You really don't like negotiations! You try to avoid any conflict by any means possible, maybe by passing the responsibility to another member of your team or staying quiet.

• You find negotiations intimidating and would be susceptible to threats, therefore you would rather work behind the scenes.

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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C’S = COLLABORATIVE

• You are an open and honest negotiator, who understands the concerns and interests of the other party.You enjoy negotiations especially if it involves finding creative solutions to mutually satisfy both parties.

• However, you often turn simple situations into more complicated ones by overthinking and exploring many alternatives.

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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D’S = COMPETITIVE

• You are a highly results-driven, focused and assertive negotiator who can often become aggressive.You thrive in a negotiation situation as you enjoy the opportunity to win.

• You have a strategic mind, therefore you don't get phased by your opposition. Being right matters more to you than preserving relationships.

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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E’S = COMPROMISING

• Your main concern while negotiating is finding middle ground and doing what's fair for both parties.You would rather compromise and settle with less than anticipated in order to satisfy the other party's needs.

• You may rush negotiations and make concessions too quickly which can lead to a loss.

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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IDENTIFYING THE CHARACTERISTICS OF A GREAT NEGOTIATOR

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Strong Listening Skills Asks Open-Ended Questions Perseverance

CHARACTERISTICS OF A GREAT NEGOTIATOR

Ability to be quiet Unemotional Good Communicator Goal Oriented but NOT tied to a specific outcome Relationship Builder Professional

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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Having an open mind Using the correct tone of voice Conveying a clear message STRONG COMMUNIC ATION SKILLS INCLUDE

Knowing when to speak Knowing when to remain silent Remembering to backtrack Managing Emotions

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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NEUROSCIENCE HAS PROVEN IT…

People make emotional decisions and justify them with logic!

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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Becoming a Great Negotiator

MANAGING EMOTIONS

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WHAT ARE SOME COMMON EMOTIONS IN A NEGOTIATION?

• Desire

• Fear

• Frustration • Greed • Competition • Anger

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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TACTIC #1 FOR MANAGING EMOTIONS

Focus on the Goal

Focus on their goal and stay positive even in a difficult negotiation. Ø“This home is in the school district you wanted; your kids will be able to attend the school that is walking distance from the house.” Ø“This sales price will give you a great return on your investment.” Ø“Accepting this offer will allow you to close this chapter and move on to the next phase of life.”

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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TACTIC #2 FOR MANAGING EMOTIONS

• Be Empathetic • Sometimes the client just needs to go through their emotions, feel and vent their feelings – hear them out.

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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TACTIC #3 FOR MANAGING EMOTIONS Don’t spend TOO much time on any one point.

Every real estate negotiation has multiple points of negotiation such as price, closing date, closing costs, etc. Don’t let the client get caught up on the one thing they don’t like.

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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TACTIC #4 FOR MANAGING EMOTIONS Ask Small Commitment Questions Ø“I know you don’t like the closing date but are you okay with the price?” Ø“I know you want them to fix the kitchen sink, but if that didn’t happen, would you proceed with the purchase?” Ø“If we did not have this one issue, would you move forward?”

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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TACTIC #5 FOR MANAGING EMOTIONS Avoid Rushing the Client Unless there’s a real deadline that you need to keep your client aware of…don’t rush them.

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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TACTIC #6 FOR MANAGING EMOTIONS Handling & Preventing Objections Ø“Now I know this offer is likely less than you were expecting but based on the current market conditions and slightly lower buyer demand, not to mention new construction nearby…we think this is a strong offer.”

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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Becoming a Great Negotiator

BEING PROACTIVELY AWARE

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You always have to be on the look out for data and clues!

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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READING SIGNALS IN REAL ESTATE

• Completely empty house • Partially packed house – boxes starting to be packed • Half-empty house – divorce, empty nest • Carefully staged property

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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HOW CAN YOU AVOID SENDING THOSE SIGNALS WHEN YOU’RE ON THE LISTING SIDE? • Explain ‘signals’ to your Seller who likely won’t realize that buyers (and their agents) will be looking for clues in everything about their home.

• Encourage your sellers to NOT pack up until absolutely necessary and if/when necessary place boxes in storage or attic, etc.

• Fill in empty closet or room space where possible to not leave clues of your situation.

• Don’t leave out clear indicators of impending dates or deadlines like notes on the fridge or in your home office.

Movers Monday 8am!

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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CLASSIC TACTICS FOR NEGOTIATING

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BID LOW/JUMP HIGH Go in low with the hopes they’ll bite but prepared to jump much higher when that’s not accepted.

Traditionally used when the property has high DOM and the Buyer wants to ‘test’ the seller’s position or desperation.

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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EITHER/OR BARGAINING CHIPS Including items in the offer that can be given away.

Asking for an appliance that could actually be given away.

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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TIME AS A BARGAINING CHIP Timing is often as important as price or other terms (sometimes even more so) which makes it a powerful bargaining chip.

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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SPLIT THE DIFFERENCE

Meet in the middle Buyer offered $5,000 less than asking price (or 60 day closing when you want a 30 day closing)…

Split the difference – counter $2,500 lower (or 45 day closing) to split the difference.

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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TRADE-OFF I will give you __________________ If you give me __________________ Examples: • Lower purchase price but no closing costs • Closing costs but no repairs • Repairs but the closing date of my choice

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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TAPERING Tapering is a method of each counter offer (on either side) being only slightly higher or lower.

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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TAKE IT OR LEAVE IT

Seller or Buyer responds with Final Offer

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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WORKING WITH THE OTHER AGENT

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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BE THAT AGENT EVERYONE WANTS TO WORK WITH

• Learn to take issues and focus on solutions instead of turning everything into an adversarial crisis • Avoid using inflammatory language like: • Deal Breaker • Freaking Out https://youtu.be/02FHk1Yaaik

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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SUMMARY POINTS • Strong negotiators must master the specific skills needed to protect their clients • There is power in having information about the property, the neighborhood, and the market as well as in the motivations and needs of everyone involved in the transaction • All parties are emotional during a negotiation – even the agents! Understanding this fact, anticipating emotion and developing skills to manage those emotions are important to being a great Negotiator.

• Determining the top negotiating items then a range of acceptance is important to guiding the buyer/seller in selecting a strategy and objectively considering offers.

• Anticipating the response prior to making the offer/counter-offer strengthens the clients’ position.

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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