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Negotiating is an art, a skill and a science. In the world of real estate, understanding how to negotiate is a must. Before you approach the negotiation table, get familiar with these 10 tips to win any negotiation in real estate.
1. Never act too excited.
Every deal is important; however, hide your emotions. Don’t overshare in an attempt to make yourself look better. Talk less, and listen more. Silence is the loudest word. In between pauses of silence, the fear of losing the potential deal will intimidate the person on the other side of the negotiation table. This can be leveraged to the outcome of your choice.
2. Knowledge is power; know your goals.
Knowledge is power. Educate yourself on successful real estate investors. Make relationships with the city planners in the county you are looking in. Educate yourself on zoning and uses. Knowledge is a valuable addition to a seller, client, tenant or buyer. Always add value to the opposing side, and watch the magic unfold.
3. Trust should be earned, not lost.
This is a basic concept: Never lie. Lies will always be discovered, and you will be held responsible. Doesn’t sound like a good time? It’s not.
There is leverage in trust. Always do the right thing. Display trustworthy actions, and watch your negotiations work themselves out. Trust and negotiations work in tandem in real estate and beyond.
4. Make them think that they’re leading the show.
A helpful strategy is to allow the other side to think that their ideas are the ones coming to fruition. The person on the other side of the negotiation table should feel comfortable at all times. It’s natural for someone to believe that they are in control of the situation, making it more comfortable for them. Use affirmative language that will leave the ball in their court.
5. Don’t act like it’s your last deal.
Sometimes, brokers, sellers and buyers act like the deal in front of them is the last deal of their lives. Do not go into a transaction with this mentality. The negotiation table is not a battleground. Humility and empathy should never be taken for granted. If you are taking a hard approach toward the deal, the other side will become uncomfortable. Negotiating is about finding a win-win situation. Focus on listening to the issues at hand and offer solutions.
6. Let the other party speak first.
At first, never put all of your cards on the table. Many negotiators stick to the middle ground. Stay quiet, and let the other side speak first. Navigate from there. Once everything is on the table, express your figure. You can set it lower knowing what the potential middle ground will be. In this negotiation, you are already ahead.
7. Understand real estate market dynamics.
If you are acting as a negotiator, then you should know the climate of the current market. Sometimes market rates are inflated. Know the facts before approaching the negotiation table. One or two transactions are insufficient for reliable data.
Further, you should also know the factors that elevate or deflate property prices. For example, a new roof is a value add. An old roof is a loss. Basic knowledge of the current real estate climate will do wonders for your negotiations. If you don’t have time to study the climate, hire a professional. You will save time and money.
8. Make a database of persuasion techniques.
Make a list of your recent persuasive endeavors. Practice in day-to-day life. What worked? What didn’t? Write down what you wanted, what you said and the result of the practice. Study your successful techniques. In time, you will find what best works for you. Stay consistent and honest.
9. Friction and ‘no’ are underestimated; befriend the two.
You are now entering the master tips of real estate negotiation techniques. Some people are too afraid to say no. This is a disadvantage. The power of no and friction, used sensibly, can help you tremendously. Friction is good as far as it doesn’t violate the rule of not being overexcited or being too difficult to deal with.
For example, saying no at the right time during the deal can be extremely persuasive to another person. They might get nervous that they weren’t able to offer a win-win situation, or perhaps they are under financial constraints. Don’t be afraid to walk away, even if it’s a bluff. The power of no can help lead you to your bottom line.
10. Know the other party, and study their goals.
Rushing toward a negotiation without familiarizing yourself with the other side is a disadvantage. To create a win-win situation or to leverage using friction, you must know and consider the goals of the other party. Say the other side specializes in industrial real estate and is seeking a new production facility. With your upfront knowledge, you will be better able to note to the industrial property highlights. Give the other side a hint that will help lead them toward their next goal. Ideally, the hint is subtle, yet powerful. This can only be done if you’ve familiarized yourself with the person at the other end of the negotiation table.