Each day I have amazing conversations with my coaches and with my clients about what is going on in their real estate world. Nearly every challenge they face is about negotiation. Negotiation with their clients, on behalf of their clients, with a prospect, with a team member, with a broker, with another agent, with themselves and even with their family and friends.
Most of the challenges that I debrief with clients come down to negotiation skills. Lost opportunities and interactions involving conflict and/or misunderstandings can almost always be grouped in to three major elements that are foundational to negotiations:
Planning, Power and BATNA.
Let’s take a look at some specific examples where improved negotiation skills in these three areas either made or would have made a significant difference in the outcome of the real estate transaction:
- Planning: An agent arrived at the second stop of their two stop listing presentation. They were optimistic that they would get the listing as this was a referral from a good past client and the first stop went exceptionally well. Upon arrival, they were greeted not by the person that they expected but by a man who claimed to be her partner. They were caught off guard, unprepared and were unable to build the necessary rapport with this stranger. They didn’t get the listing and it came out a few days later with one of their competitors. Their lack of planning left them ill equipped for the situation.
- Power: Imagine you represent the buyer and it is a sellers’ market. The seller and the listing agent have market power on their side and you are bringing an offer that is less than the seller is expecting. You have exceptional negotiation skills and you use a number of smaller sources of power to equalize this imbalance. You spend a few extra moments at the agents open visiting with the agent to establish relationship power, you represent your buyer clients in their finest light and give confidence to the sellers and their agent that everything will go smoothly with the closing – positive approach power. In addition, you are able to capitalize on situational power as you get the inside scoop that a recent conditional transaction in the neighbourhood may be falling apart and this will increase the sellers competition. By utilizing your skills and experience you are able to gain some power advantage and you are successful at getting your buyer’s offer accepted.
- BATNA: This acronym for “Best Alternative to Negotiated Agreement” is critical to understand if you want to represent your real estate clients professionally. Here is a great example: One of our agents was working hard to earn a good listing. They were in competition and worried that they would not get the listing as the sellers were asking if they would pay for the staging costs. Our client estimated the staging costs at over $5k and couldn’t cover them without incurring a huge risk and undercutting their service fee significantly. By utilizing our negotiation knowledge about BATNA, we had our client ask very specific questions of the seller to determine exactly what the other agent was offering. It was established that yes, in fact, the competing agent would cover the staging but they would do it “in house” with props and furniture that they owned. The sellers had been shown photographs of one very good example of the staging but the agent’s website and other social channels had several example of homes that didn’t show nearly as well. By surfacing this information, our client was able to secure the listing at a fair fee and have the client cover the professional staging costs.
Many of you have earned your Certified Negotiation Expert (CNE)®designation or your Master Certified Negotiation Expert (MCNE)®. I strongly urge you to continue to review the material, debrief each situation for learning opportunities and continue your study of Negotiations. It’s what we do as Real Estate professionals and our clients deserve the very best.