A complete guide to real estate negotiations
If you have been a regular reader of our blogs, then by now you would have picked a lot of good ideas from our real estate experts. A lot goes into making a good real estate agent. However, if our experts had to pick out one skill that is the most integral to the success of real estate agents is, then it is the ability to negotiate.
The basic objective that every client expects from their real estate agent is that the agent would negotiate the best price for them when they close deals. As an agent, you need to put in a lot of effort and ensure that you can get the best price for your client. Your negotiation skills are not just limited to this though, every single conversation that you enter into requires you to strike a delicate balance between obtaining what you need and managing to keep the other party satisfied with the deal.
This skill is not something an agent learns from the real estate school. Negotiation skills are something that takes time to develop. In this article, we have gathered some of the best tips to help you develop your A-game when it comes to the tactics of effective negotiations.
Real Estate Agent Negotiation Fundamentals
The real estate negotiation process basically requires you to have robust people skills and the ability to effectively negotiate and achieve your end game in each interaction. Whether you are dealing with clients, investors, buyers, or sellers, the following need-to-know skills will give you a distinct advantage in each interaction.
Straightforward Self Confidence
We do not expect the agents to be very flashy or behave eccentrically, yet having quiet confidence in the way you present yourself will have an immense impact on how others perceive you. Always present your points and ideas calmly. Be simple and clear, remember the person is judging your confidence. The more you are straightforward the better it will be in terms of getting their trust and agreement to your suggestions.
It is vital to be well prepared before entering into any negotiations. Do not just go prepared with the information that the other party expects. Go the extra mile and have all the details that can help you swing the deal in your favor. Having all the facts and data at your fingertips would help you gain an upper hand in the negotiation as it would establish your position as the expert to listen to and follow. In any kind of negotiation, the person with more relevant information gains the advantage, and the same applies to real estate negotiations as well.
Clear knowledge about the market conditions, comparable properties, tax rates, other available property, mortgage rates, and other integral data will help you win any delicate negotiation. As a negotiator, you should always have this strategy to be the most informed person in the room.
Pick Up A Few Negotiation Books
You may have often come across those lists of must-read books of all genres, similarly, you will find many books written by real estate professionals about the strategies needed in the real estate business. these books will teach you not just about negotiating effectively but also about the strategies to apply in many real-world scenarios.
Whether it is related to setting up your own real estate business or investing in property, there is a book out there detailing everything you need. These books will provide essential advice through real-world examples, insights into the business, proven tactics to sell, and how to be successful in your personal capacity as a realtor or broker.
Learn the Stepwise Strategy For Successful Real Estate Negotiations
Whether you are a new realtor or an experienced broker, it is always a good idea to have a step-wise process to initiate, continue and close your real estate transactions. Your ability to close successfully depends on not missing out on any aspect of the transaction. Whether it is about the home value, price of the property, lender rates, or purchase details, it is necessary to ensure that you are not missing out on anything vital.
Some of the common steps that will help everyone streamline the process and become better negotiators are as follows:
- Have a clear understanding of the needs and requirements of the sellers.
- The financial aspects of the offer.
- Investing time in building a good relationship with all the parties involved.
- Ask questions to gain a better understanding of the requirements.
- Always establish your position as the expert.
- Clearly state your offer while making sure you have room to negotiate.
- Be prepared to counter negotiate when faced with objections.
- Effectively close the deal.
General Real Estate Negotiation Skills
Learn The Other Party's Requirements From The Deal
Agents should not enter without first having a clear idea about the other party's expectations and needs from the deals. All deals depend on this basic point. Try to identify what would make the other party be satisfied to close the deal. Not the basic why are they selling or buying but what they expect to be the best deal.
Having this information will give you an advantage as you can take those points to your clients and ensure that everyone feels that it is a win-win deal for them.
Negotiate First By Call Before Getting It In Writing
A fundamental aspect of real estate business negotiations is to ensure that only the finalized points are included in the written agreements. Most sellers and buyers are open to negotiation at different levels. Make sure to address all the issues before you proceed with the written agreements.
Once things are in writing it is hard to get the other side to reconsider any point or aspect of the deal. it is better not to be worried about getting the client or the other party under contract; it is far more important to ensure that when you close the deal and get the agreements in writing you are providing the best deal to your client.
Walk Away If Needed
It is necessary to remember the reason for the negotiation. It is to get the best deal and not necessarily a particular deal. From the start of the negotiation leave an option to walk away from the conversation if your feel that it is not favorable to your client.
There are always going to be other buyers, sellers, and properties in the real estate market. Even the best deals are not the only deals available. It is vital to recognize when your client's requirements are not being fulfilled. However, even if you decide to walk away from a certain transaction it is necessary to do so on good terms. Conditions in the real estate business are constantly changing, so you may have to revisit the real estate negotiation process for the same property or house.
Be Straightforward And Fair In Your Interactions
The skills of a realtor are tested when the negotiation begins. Yes, you have a clear objective to find the best deals for your home buyer or seller. Still, it is necessary to be fair and transparent when you are negotiating.
It is vital to remember for all agents that when it comes to the real estate business each negotiation is a delicate matter. A home buyer or seller expects honest advice from real estate professionals. Never give grounds to your clients or the other side to have doubts about your professional standards.
Be clear from day one. For example, if you feel that your seller's house could benefit from carrying required repairs and home improvements then be upfront about it. Getting the home really for sale is also a keep part of your work.
Being fair will get you much ahead while negotiating than any underhand tactics would. Your ability to close depends on you gaining the trust of all the parties involved. And that is why one of the key strategies for negotiating successfully in the real estate industry.
Negotiating Closing Costs
It is required by law to inform all the closing costs clearly to both the buyer and the seller and should be agreed upon by both the parties before closing the real estate transaction. These costs are the appraisal fees, taxes, origination fees, discount points, surveys, etc. These fees will have to be paid before the title can be transferred to the buyers.
Normally, it is the buyer who pays these fees, although through proper negotiation the costs of these fees and charges can be shared with the seller.
Have A Proper Strategy For Inclusions
Most agents consider the inclusions, such as the kitchen and cleaning appliances as a given. However, this could be a good opportunity to negotiate and get something better for your clients. Instead of by default categorizing these items as an inclusion, consider marking these electronic items as exclusion with necessary negotiations.
This gives you the room to negotiate an essential fix or repair need for the house. There are higher chances that the seller will agree as in this manner they are allowed to keep the appliances and to offset that they are more willing to cry out the home improvement needed, which is of more value to your client.
Pay Attention And Learn
Learn from all those around you, pay attention to everyone with whom you come in contact. The insights you gain from observing successful agents with a proven track record will be life-altering. YOu will learn from the company you keep so make sure to expand your circle of contact and address any shortcomings you may have. The art of negotiation can be learned from both must-read books and also from agents who can guide you when it comes to negotiation strategies.
Investing In Real Estate Resources
Sometimes when negotiating you may have to rely on resources that can establish your expertise and swing the negotiations in your favor, offer you valuable support and help you sell better. Consider utilizing an online real estate platform like Dorrmat which is primarily a real estate lead generation platform. The additional benefits provided by Dorrmat are a branded and professional landing page and powerful Customer Relationship Management. The benefits of these two resources are:
A professional landing page will help you showcase all your positive reviews and successful transaction in one place. It also gives you an opportunity for your clients to report their satisfaction by writing testimonials. This can easily add value to your credibility and help you succeed in negotiations with new and prospective clients. You will have a ready source to show your proven track record to date for successfully helping your sellers and buyers.
Customer Relationship Management Tool
One of the crucial components of successful negotiations is the time factor. A lot can change in a real estate transaction in a short span. Having a robust CRM tool provided by Dorrmat means you have a ready guide to keep track of all your clients and their transactions in one place.
You can quickly view what the other negotiator has asked for, what your client has agreed to, and what is now left to negotiate with ease. When you have all these key facts and information in hand, then you are in a better negotiating position and can steer the real estate negotiations to a more favorable completion for your client.
In this article, we have provided a broad overview of the aspect of negotiating in the real estate business. Now certain aspects of the negotiations may be common across different business organizations but when it comes to the real estate industry you must remember that it is not enough for real estate agents to be skilled and knowledgeable, but they are also expected to be good negotiators.
The process of negotiating will depend on each seller, buyer, and upon each house. However, you must always put in the effort to improve your skills in the real estate negotiation process. The strategies and tips we have provided will effectively help you develop and be a better negotiator. This is an essential skill that is a must for all real estate professionals.