(This is Part 1 of a six-part series. Read Part 2, Part 3, Part 4, Part 5 and Part 6.)
Order-taking is dead. If you want to prosper in today’s market, negotiation is the key to prospering while your competitors starve.
During 2005 and 2006, I remember being shocked to learn that many agents across the country had sold substantial amounts of property without ever going on a physical inspection or dealing with a loan contingency. The buying frenzy was so great that buyers waived all the contingencies in order to purchase.
Those days are gone. With the collapse of the subprime market and a decline in the number of transactions nationally, negotiation skills are a key factor in determining whether an agent will survive in today’s shifting market. If you want to prosper while those around you are floundering, becoming a master of negotiation is the route to consistent high production, regardless of the market conditions.
1. WAIT! (Why am I talking?)
There is an old adage in sales circles that the first one who speaks loses. When buyers are jittery, it’s easy to scare them off. The easiest way to do it is to open your mouth. For example, you may point out the lovely chandelier in the entry. If the buyers think it’s ugly, the buyers’ focus shifts to how much it’s going to cost to change it. By drawing attention to this feature, you have just created a major objection that could block your sale. Consequently, the first rule in negotiation is to always ask, “Why am I talking?” Another consistent mistake poor negotiators make is that they begin negotiating with themselves rather than waiting to hear what the client has to say. For example, when an agent has to present a low offer, many agents are apologetic or even worse, defensive. When the agent opens his or her mouth and complains about the price, the sellers will follow suit, even though the price may have been acceptable. Putting it a little differently, keep your opinions to yourself. If you’re talking, you may be losing business.
2. Sell benefits, not features
When a buyer purchases a primary residence, they’re not buying a house. Instead, they’re buying the emotional benefits attached to home ownership. Consequently, focusing on the physical characteristics of the property — such as the bedroom-bath count, type of kitchen, size of yard, etc. — is the poorest way to motivate a buyer to take action. A better strategy is to focus on the benefits of the home-ownership experience. For example, a large backyard is a feature. A benefit is the emotional value the feature has. In the case of someone who likes to garden, a large yard offers the opportunity to spend many enjoyable hours engaging in a favorite hobby. For parents, a large yard can be the safe haven where their children play under their watchful eye. In contrast, for a homeowner who travels frequently, a large yard may be a maintenance headache requiring expensive gardening services. The only way to identify what constitutes a benefit to your clients is to take the time to discover how they live, what they like to do, and what matters most to them.
3. Humor diffuses tension
A “pattern interrupt” is a neurolinguistic programming technique used to defuse volatile situations. A pattern interrupt can help you regain control of the negotiation when things are spiraling out of control. For example, if one or more people start shouting during a tense negotiation, do a pattern interrupt by coughing and asking for a drink of water. (Be sure to ask the person who is shouting the loudest to get it for you.) The idea is that by changing the person’s body position, you can also change the energy at the negotiation table. A number of years ago, one of my best lender clients had an REO (foreclosed property) listing in ritzy Bel Air, Calif., that we couldn’t sell. The market was abysmal, with almost 60 months of inventory in this particular price range. After extensive marketing, we finally received an offer that was 40 percent below the lender’s foreclosure price. I set up the appointment with the senior VP and trudged over to discuss the offer. Imagine my chagrin when I was ushered into the conference room and the entire board of Directors was there. At that point, I wanted to run as fast as my 3-inch heels would carry me. Instead, I backed into the room and looked over my shoulder at the board. When they wanted to know what I was doing, I replied, “I figured I better be ready to run away fast when you see what this offer is.” Everyone laughed. They didn’t sell the house to this buyer, but they did give me a price reduction that lead to a successful sale.
Are you interested in increasing your negotiation skills? If so, look for next week’s article to learn how to avoid three critical mistakes that poor negotiators make.
Bernice Ross, national speaker and CEO of Realestatecoach.com, is the author of “Waging War on Real Estate’s Discounters” and “Who’s the Best Person to Sell My House?” Both are available online. She can be reached at email@example.com or visit her blog at www.LuxuryClues.com.