Negotiation Strategies That Actually Convert!

Real estate negotiation sounds easy on paper, but in practice even small mistakes can sink deals. You need to understand psychology, strategy, and a shifting market to get the best outcome for your clients. Not easy! That’s why in this guide to real estate negotiation, you will find actionable tips you can start using today. Want to become a better negotiator? Grab a cup of coffee, turn off your phone, and check out these clever real estate negotiation strategies which can make you a deal maker in real estate:

Make Them Think Saying Yes Was Their Idea

No one likes to be coerced into doing something. That’s why smart negotiators often subtly encourage the other party to think they’re in control. A great way to do this is to offer them a quick out. Studies have shown that using affirming language like “You’ll probably refuse, but…” leads to increased compliance. Here’s “Million Dollar Listing” star Josh Flagg with an example of how you can apply this technique in your negotiations: "The buyer is asking for you to pick up the closing costs to seal the deal. You’re free to say no to that, of course, but would you be willing to consider it?”

Include an Escalation Clause to Make Your Offers More Competitive

An escalation clause is a great way to give your client the best chance to win a multiple-offer situation. Here is the language I use in our counteroffers: We hereby instate an escalation clause. 'Matt Tedlene is willing to pay AED20,000 more than your highest written offer, but not to exceed AED 1,820,000. Note that a copy of the highest written offer must be sent along with acceptance. Use a "Letter of Intent" to present offers to sellers. See a sample below:

Negotiate From a Win-Win Perspective

Many new agents make the mistake of starting every negotiation as if they were going into battle. Not only will this annoy the agent on the other side of the deal with whom you will likely need to work with again, but it can actually hurt your client’s interests as well. "Instead, learn to focus on solutions instead of turning everything into an adversarial crisis. Your clients and fellow agents will thank you.”

When Things Get Personal, Sleep on It

Brokers should not make the negotiations personal. Both sides want to get the deal done. If it is becoming personal, I recommend slowing down the negotiation and communicating that both sides should sleep on it before moving forward. Communicating and reminding the other side to not take negotiations personally is very important to keep both parties happy and interested in continuing. Focus should always be on the clients and not the brokers.

Look out for things that one person can let go but the other can see as valuable - Assess & Identify Value-creating Moves.

Assess why you are making the negotiation in the first place! Are you negotiating the best deal for yourself or, ideally, a win-win situation? One of the core challenges in negotiations is identifying value-creating moves: things that are cheap for me to give and valuable for you to receive, and vice versa. This is very true for real estate negotiations. For example: Maybe the seller can let go of the furniture in the house and give it as a complimentary 9but cannot reduce the price of the property) while the buyer would pay the asking price but get the furniture for free and see it as a way to cut cost because he doesn't have to spend money furnishing the property anymore.

Here’s an example of this methodology in action:

The house is on the market for AED4,600,000, but your research, backed up by your broker’s opinion, tells you it’s overpriced. By your estimate, a fair price would be AED 4,400,000. But when you offer that amount, the seller says you are “not even close” and doesn’t counter. You think the seller is in denial about the slump in the housing market, which has affected prices in your community quite a bit. Sellers are looking at the prices paid for their neighbors’ houses a month or years ago, while buyers are looking at comparable transactions from the past few weeks and days to try to determine the fair price. You might consider creative deal structuring to break through the resulting impasse. Start by noting that the typical house purchase is a very tight deal: Once the seller commits to a particular buyer, the seller can’t (legally) sell the house to someone else, even if offered a substantially higher price. In your circumstance, a loose deal structure might provide a way forward. Imagine you make a slightly higher offer (it is, after all, your client’s perfect house) of AED 4,525,000. Then give the seller 60 days to keep shopping the house. If a better offer comes in during that time, the seller has the right to walk away. This real estate negotiation strategy creates value based on the different beliefs about the value of the house. In effect, you are saying this to the seller: “You think the house is worth AED 4,600,000, but I think you won’t get a better offer than my AED 4,525,000. I’m so confident in my belief that I’m willing to give you 60 days to prove me wrong. If you do find a better price, I’ll keep looking for the perfect house. If you don’t find a better deal, we’ll close in 60 days at my price.

Always Keep Notes on Listing Agents in Your CRM

Since listing agents can have very different negotiating styles, it’s crucial to keep notes on each listing agent you work with so you can adapt to their working style when you do another deal with them. Did they prefer phone calls or texts? Were they responsive? How long did they take to respond to your emails? This is all useful data you should be noting in your customer relationship manager (CRM).If you don’t have a CRM, use an excel spreadsheet.

Focus on Timing

When I got into real estate, it was explained to me that one of the most important factors in negotiating with buyers or sellers is the timing. Too fast and everyone feels like it was too easy; too slow and one side may lose confidence or get cold feet. The key to managing the cadence of a deal is communication. Let the other side know what to expect and when.

Try to Have More Data Than the Other Side

The adage in real estate is location, location, location. When it comes to negotiation, it is data, data, data. Let the data drive your negotiations and decisions. Gather information and leverage it to your advantage. The key is to have more information than the other side. The person armed with the most amount of information is more likely to win the negotiation. You should also have an understanding of the best alternative to a negotiated agreement. If negotiations fail, what are the other options for your buyer and seller? ”Here are a few data points you should know about a listing:

• Market time
• Average market time for similar homes
• Average market time as a whole in the market
• Comparable
• What else is on the market
• Square footage
• Room counts.
• Taxes
• Homeowner association fees
• Why they’re selling.

Learn the Power of No

Contrary to popular opinion, “no” is one of the most empowering words someone can say. Here’s Judith Sills on the power of no: “Where negativity is an ongoing attitude, ‘no’ is a moment of clear choice. It announces, however indirectly, something affirmative about you. ”As a hostage negotiator for the FBI, Chris Voss learned that saying no can be far more powerful in getting someone to agree with you than saying yes: “

Yes, is a horrible word. It scares people. They wonder what they’ve committed themselves to. They become nervous. They become distracted, and when they’re distracted, they’re not listening to you. An agreement is not necessarily through ‘yes’ because, again, we’re so used to being trapped by ‘yes.’”

Use Price Anchoring to Find Someone’s Lowest Price

The low anchor is the most effective negotiation strategy for me—when you intentionally give a lowball offer or range to a prospect to change their perception of the deal’s financial aspects. Typically, this will get a prospect to go right to their bottom line, or at least close: ‘Hey Jim, I’m taking a look at the numbers, and don’t kick me out here, but our initial glance is somewhere around AED 5,250,000.’ Response: ‘Matt, I told you I wanted AED 5.400,000! No way AED 5,250,000 works! I won’t take a penny less than AED 5,400,000!’”

Learn What the Other Party Needs From the Deal

Learn what the other party needs—not really why they are selling or buying, but what will satisfy them that they have a win-win sale. Ask the agent questions and praise the good points of the property or the nice character of the buyers if you’ve met them. Put together the best deal so that the closing is smooth and successful. I’ve closed many deals using this mindset. “Here’s an example: I call the listing agent to say that we are writing an offer. Are there any terms the seller needs? Fast close? Contingency to find a new home? I don’t really ask why the seller is selling, but I will often pose a leading question to find out why they are selling (perhaps I see they’ve owned this home for many years via the title profile, or did they raise their kids in it? Or was this an investment rental?). I take this opportunity to tell the agent about my buyer’s story and the lender involved so far.

Keep Your Cards Close, but Try to Stay Nonchalant

This strategy is used well when it’s a buyer’s market. It is important to be nonchalant and use innuendo, letting the listing agent know that we have other options. It is vital that the other side of the table never thinks that this home is your favorite or that you don’t have other options.

Live Conversation Beats Texts & Emails Every Day of the Week

I am in a transaction now with an agent who returns all of my voicemails with text. I get the sense she is making a point that the new generation uses technology. I’d like to make a counterpoint: She is missing so much information by communicating only electronically. There is a natural back-and-forth in a conversation where way more information and understanding come out, and those things can be essential in getting to a win-win. You might learn, for example, that a seller is very nervous because they are buying a home and trying to close both sales and move the same day. If you are in a multiple-offer situation, your client now has a card to play. Perhaps they can offer the seller a one-week lease after closing. This may win the day.

Use Inclusions Strategically

As a certified negotiation expert, I feel like a place where agents miss the boat is on inclusions. Many automatically include the washer, dryer, and refrigerator, but I have often wondered why. I always put it as an exclusion and say they’re negotiable. At certain price points, when the AED 10,000 or so will make or break a sale, it might be a good idea. However, if I can leverage it for something my seller wants when it comes to inspections or more favorable terms, then it is pretty effective, in my opinion. You can say, ‘You’re already taking the appliances, so your client can take that savings and fix an inspection item.

Over to You

Have a great negotiation strategy we didn’t cover here? Let us know in the comments. Visit my blog website; Dubai Real Estate Advisor - Diamond Ilori (site123.me)Text me on WhatsApp at Share on WhatsApp