- There are three stages of every negotiation.
- Just learning these gambits or tactics will make you a better negotiator.
- The challenge with negotiating in residential real estate is that emotions run high.
Some might say negotiating is for prison wardens and hostage negotiators, but some of the most highly paid people in the world — and the ones that are in the most command of their own time — are superb negotiators with stellar negotiation strategies.
Negotiating is a skill that’s learned with practice. In recent years, the real estate industry has begun to recognize the power of being a good negotiator. There are educational courses specifically for agents to become better at this old skill.
You must first realize that there are three stages of every negotiation:
- Learning your opponent’s goals and making it clear what you want.
- Gathering information about the other party and their needs.
- Reaching for a solution that is acceptable to everyone involved.
The challenge with negotiating in residential real estate is that emotions run high. Not just with our clients, but with the agents who represent them as well. Ego is rife in the industry and often clouds negotiations from the start.
“Gambit” is a chess term that means “any maneuver for advantage.” You could label these tactics just the same.
So, here are five of the best gambits you can practice and use in your next negotiation to secure a positive and fruitful outcome.
1. The flinch
This is a way of audibly or visually reacting whenever you hear something such as price or terms that are presented to you. This might make the other person feel as if they’ve asked you for something offensive or too much, and most will often retract and suggest something more advantageous to you.
Example: Someone suggests a $450,000 offer on a $500,000 listed home. You immediately react — surprised, and almost offended. More often than not, he or she will retract the offer and attempt to better it so as not to upset you.
People don’t like confrontation, and in the face of it, they will attempt to make things better even at their expense.
2. The hot potato
This is a way of testing the seriousness of a problem someone else wants to give you.
Example: Your buyer tells you she wants a three-bedroom, two-bathroom with a garage for $300,000 in a neighborhood you know isn’t anywhere close to $400,000.
If you say nothing, you will have to come back with your tail between your legs because now it’s your problem.
Test it right away. Say something like, “OK, we might be able to find that” (always agree) — “however, if it turns out what you’re looking for just isn’t out there, would you like to look in another, perhaps better neighborhood, or would you just like to stay in the home you’re currently in?”
Chances are, the reality of their wanting to be in that neighborhood is less of a deal-breaker than once thought. It’s important to test it as soon as you hear it.
If you let any time pass, it becomes your problem. People are giving you their problems all the time, and don’t we have enough of our own?
3. Smart is dumb; dumb is smart
The late Peter Falk in the old TV series “Columbo” knew and used this all too well. He played the inquisitive, sometimes absent-minded detective so well, the criminals usually helped solve the cases.
The rule of thumb here is that if you let your ego run amok and tell the world you think you’re the best agent-negotiator-king or -queen of the universe upfront, you’ll often raise the game of the other side and give yourself a lot more trouble than you need.
You’re much better off coming in with an attitude of gratitude and an almost novice curiosity. This lets everyone’s guard down; people are receptive, open and might even get frustrated that you’re not better at this than you are.
But valuable information will flow more freely, the other side will be more willing to help you, and your ability to control the negotiation becomes much easier as a result.
4. The set-aside technique
If you’ve been in sales for a minute, you know that little decisions turn into big ones. So often, as agents (and Americans), we want to cut to the bottom line. The price.
Of course we do. Whereas closing date, title and escrow company, financing, inspections, contingencies and so on all emerge as small issues with respect to the bottom line.
If you’re remotely close here, I suggest that you work out the little details and get the other side to say “Yes” to these little issues first. Say, “I see, you are offering $(fill in the blank). Well, let’s just set that aside for a minute and tell me about closing date, contingency, etc.”
In this example, setting aside the price and getting agreement on other issues will garner momentum in the negotiation. Little decisions turn into bigger ones.
Important note: Never negotiate all these issues down to one issue. If you do, someone has to win, and someone has to lose. Always leave two or three on the table to maneuver. Give to get, and agree to concede for closure. Everyone walks away feeling much better in the negotiations, and the result is much better for everybody.
5. The red herring
This is the classic “shape of the table” gambit — where your opponent’s emphasis on the negotiations is focused on something that appears to be crucial — the deal-breaker.
Only to find out that it wasn’t that at all, and they gave it up in the end so you would give up what they wanted. This is often misclassified as the “bait and switch.” In this case, the red herring isn’t unimportant; it’s just an issue that could be conceded at the expense of the greater issue. A puffed-up importance on a lesser-priority issue.
For example: As a listing agent, you receive a good offer, and instead of accepting it, you tell the buyer’s agent that the most important issue here is the closing date (the red herring).
You want them to shave 20 days off their desired timeframe. When they attempt to talk about any other part of the deal, and you bring it right back to closing date, over and over again.
Finally, when she relents to meet your timeframe, you suggest that you’ll let her keep the original close date if she agrees to reduce the closing cost credit by 50 percent, which was the important hidden agenda and higher-priority issue in the first place. Despondent, she gets her clients to agree. (This is a dangerous one. One simple counter to the red herring is to treat it like a hot potato.)
As with all negotiating gambits or tactics, there are counters — a method by which you can diffuse or redirect the tactic that’s being used against you.
However, that’s a different article.
Even if you think these are a little rash, and you wouldn’t purposely use these yourself, be forewarned. You should learn as many as you can, learn the counters to each as well and practice them.
Why? Because whether you realize it, they are being used against you all the time.