Buying real estate is one of the biggest purchases a person can make – and how you handle that purchase can make or break your future return on investment.
With such high stakes, it’s easy to feel stressed about the complicated negotiation process. To relieve that burden, we turned to members of Forbes Real Estate Council for their advice. Below they shared their top tips for easily navigating the negotiation process for your next real estate purchase.
Members of Forbes Real Estate Council share tips on handling real estate negotiations.
Photos courtesy of the individual members.
1. Find Common Ground
You’ve reached a point where you have a willing buyer and a willing seller. There’s no reason to not find common ground. The key is to keep the buyer and seller discussing how to close the gap and reminding each of them that the other side hopes to reach an agreeable position, too. As long as you can keep people’s minds open to thinking outside the box, you have a 95% chance of closing the deal. Everyone must maintain a position of mutual respect. – Cynthia Inman, Ranch Connection LLC
2. Create A Positive Emotional Environment
The negotiation process is confrontational and stressful by nature. I try to mitigate those challenges by being sincerely complimentary of the property, agent and client whenever possible. The intent is to create a positive emotional environment so that the cooperating agent wants to work with me–instead of against me–in achieving the mutual goal of our clients, which is a successful closing! – Frank Gray, Abby Realty
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3. Understand What The Other Party Wants Most
Stephen Covey once said, “Seek first to understand, then to be understood.” If you understand what the other party wants most, then you can tailor your presentation and approach to fit them best, which will then lead to you getting what you want. Most of the time, price is not what matters most. If you can make your terms, presentation and approach most appealing, you are more likely to get the deal! It’s a win-win! – Arianne Lemire, Glast Heim LLC
4. Negotiate Principal To Principal
Negotiate one-on-one with the other principal. Start out there to negotiate the essence of the deal. Sometimes you’ll hit a roadblock and that’s when a good broker can earn their commission as the middleman to keep the deal together. Let the attorneys handle the details, but initial negotiations should always be principal to principal. If you can’t settle reasonable terms that meet your requirements, you have to be willing to walk away. – Chris Finlay, Lloyd Jones, LLC
5. Be Organized And Communicative About Final Details
Be very organized and communicate with all parties involved on a daily basis. When on the buyer side, make sure that all the inspections needed are ordered. In the final stages, it is really important to be proactive in transferring the service providers into your client’s name so there are no disruptions when they move in. – Rochelle Maize, Rochelle Maize Luxury Estates
6. Do Your Due Diligence
Begin by understanding the market, doing your research and doing necessary due diligence so that you’re making an informed decision and your expectations are data-driven. Real estate transactions have many moving parts and a win today has the potential to be a loss tomorrow. Understanding your negotiating partner’s requirements and working, when possible, towards a win-win solution is always ideal. – Eve Moss, Clarendon
7. Get Aligned On Inputs
Negotiations focus on price, which is a subjective output. Buyers and sellers both invest a tremendous amount of time in producing their prices, but are hesitant to share their analysis. If you’re off on price, you’re likely misaligned on inputs. Inputs like comparable sales, cost of improvements and lease rates are less subjective, and buyers and sellers are less defensive in being challenged on them. Do your homework, be prepared to share it and create alignment by discussing inputs. – Chad Collishaw, Epoc Real Estate
8. Let The Other Party Start The Negotiation
It’s crucial to listen more than you speak. Always be prepared to let the other party start with their offer first. When the other party declares their position first, you then have the ability to determine the midpoint of the negotiation. Know what a deal is worth first and be prepared to walk away if you can’t secure the terms you need for the deal to make sense. There are other opportunities. – Logan Ransley, Landlord Studio
9. Aim To Solve Non-Financial Problems
Every potential seller has a problem (or multiple) they are trying to solve. If you can help them solve that problem, you are likely to get a deal done. We often only consider the financial aspect of negotiations, but there can be a wide range of non-financial issues that the seller is looking to address as well. Listen and help them find solutions to their problems. – Alec Miller, Schiff Capital Group
10. Be Decisive And Responsive
Two things matter to effective negotiation: First, if your counterparty leads with how you’ll all get paid, just walk away. Profit is a worthy by-product of a good deal, not the sole reason to do it. Second, change happens to you, but progress happens because of you. Being decisive and responsive helps you control a dialogue and get what you need because you ask for it. – Nathan Headrick, BluWater
11. Focus On Your End Goal
Some begin negotiating when an offer arrives, but we believe negotiations start at the first point of contact. Being able to control the narrative is critical to positively influencing the outcome. Having the ability to analyze motivations, relieve points of pain and position expectations will prove invaluable. Don’t forget that egos kill deals. Focus on the end goal and always keep your cool. – Anna Michaelidis, Royal LePage Urban Realty
12. Leave Your Emotions Out Of It
The No. 1 thing to keep in mind in a real estate negotiation is to keep the emotions out of it. Sellers are especially prone to letting their emotions dictate their actions because it’s their real estate that is for sale. Staying grounded in the facts keeps everyone working towards a successful transaction. – Mark Tiefel, Capital Equity Group, Inc.
13. Build Rapport With The Seller
Build rapport with a seller and find out what their pain points are for selling the property. Whether they are in a distressed situation, need to relocate or need to sell a family home, it is important to connect to what they are going through and help them navigate the process as smoothly as possible with solutions that will help them meet their needs for selling the property. – Nancy Wallace- Laabs, KBN Homes, LLC
14. Know Your BATNA
Know your BATNA (best alternative to nothing at all). When you are negotiating, you need to understand that real estate is easy, but people are hard. People have emotional ties to real estate that can derail a deal. Going into the negotiations, you need to know where your absolute bottom line is and stick to it. Don’t cave and don’t acquiesce. Be creative, but adhere to your BATNA. – Amy Tiemann, TM1 Properties
15. Remain In Control Of The Deal
Always be in control of the deal. Be respectful of the other party, but know where you can give and where you will not give in. Make sure all your documents clearly specify what your fair expectations are, starting from the Letter of Intent to the closing. Make sure you are setting timelines based on the documents expected from the seller. Always be fair but in control. – Raj Tekchandani, Smart Capital