The Playbook: Leveraging the Art of Negotiation to Thrive in a Shifting Market
Originally posted on RISMedia.com. Featuring Buffini & Company Members Vishal Doddanna and Chuck Silverston.
The “Art of Negotiation” is more than just a catchy title for a book. It’s one of the most vital skills in a real estate professional’s repertoire when it comes to serving their clients’ best interests. While the past two years haven’t left much room for bargaining—at least on the buyer’s behalf—that has certainly changed this year.
The days of fierce bidding wars and open house lines around the block are gone, and in their wake, the housing market is gradually moving toward a more balanced structure as buyers gain some ground at the deal table.
This all leads to a seemingly clear point that the need for master negotiators is back, as are the opportunities for agents looking to thrive as the market continues to change before our eyes.
For countless agents, the pandemic-induced seller’s market of the past couple of years is all they know. Others who remember a time when things were more balanced may notice that their negotiation muscles have atrophied.
Whether you’re newer to the industry or have simply let your negotiation muscles fade away, here are some insights from leading industry experts on how to get back on track and brush up on your bargaining skills.
Time to train and retrain
Whether you’re a rookie or an experienced agent, training—and even retraining—is an approach that Lamacchia Realty COO Jackie Louh recommends.
“That’s what it has essentially boiled down to because, in the past two years, they haven’t had to do any of this—negotiating on an offer or negotiating on a price,” Louh says, noting that the Massachusetts-based brokerage is doubling down on training its agents for today and tomorrow’s housing market.
According to Louh, the company offers weekly training emphasizing different conversations agents should have with buyers and sellers in the current market conditions.
That includes giving consumers a necessary reality check about the market and what they can expect from it these days.
“You need to explain to them how this market is so different from what we have seen,” Louh says.
With several factors contributing to the transitioning market, Louh emphasizes the need for agents to get comfortable helping their clients develop “Plan A and Plan B.”
Understand the end game and plan accordingly
Negotiating may seem like an arduous—even scary—undertaking for those who haven’t had to do it as much. However, John Manning, managing broker at RE/MAX Gateway in Seattle, says it’s a skill that should be guided by a particular North Star: client satisfaction.
“When I think of approaching a client, the reward for me is not the commission check,” Manning says. “The reward for me is a dozen referrals I will get from that person in my career if they are satisfied.”
While it may sound simple enough, Manning says his top negotiation strategy is being prepared.
“The well-prepared agent/buyer combination is going to win far more than somebody that doesn’t have a systematic approach to getting their client where they want to go,” Manning says.
A significant part of that preparation will come from setting client expectations on both sides of the transaction. In the previous market, sellers could name their price and feasibility and expect to get offers at or above asking price.
Those days have all but gone as the market balances out, leaving agents with the task of getting buyers and sellers to the negotiating table and aligning both sides’ expectations.
Negotiating starts before you walk in the front door
One of the most significant changes we’ve seen in the market is the power shift away into the hands of buyers. While it’s still a seller’s market, buyers have started gaining some bargaining chips as things have cooled down recently.
According to Chuck Silverston, principal agent at Unlimited Sotheby’s International, agents representing buyers should know how they prepare their buyers—long before even seeing a home.
“For buyers, we try to prepare them to negotiate the moment they walk in the front door—and what that means is to be nice, friendly and respectable,” he says. “We don’t want our buyers asking questions that will impact our ability to negotiate items in the process.”
At the same time, Silverston encourages agents to “get your buyers as likable as possible” with the sellers and their agents.
Additional tips Silverston recommends:
Know what the property is worth and have credibility with your story. “If you come in with a low number, it needs to make sense. Oftentimes, buyer agents and buyers make mistakes where they throw in these ridiculously low numbers, and there is no justification for them.”
Always be truthful with what you say. “I’m never going to say ‘this is our final and best offer’ unless it’s a final-and-best round because if you say that, it never is. What buyer or seller is going to lose a deal over $1,000?”
Pursue the best, but plan for the worst
The feverish activity of the past couple of years has gotten people accustomed to speedy deals and only a little teamwork.
It’s hard to argue that today’s market is significantly slower than that, forcing real estate professionals to pump the brakes and think about how they need to approach transactions.
“Many times, when certain agents are just speeding through , they are missing out on opportunities to get better deals for their clients,” says Vishal Doddanna, principal agent at Vidonna Residential with Keller Williams Realty Centre.
According to Doddanna, he approaches negotiations with the other party’s desires in mind while bargaining for his clients.
Another tried-and-true strategy he likes to implement when working comes from an old adage: Start with the absolute worst-case scenario in mind.
“Whether it’s my clients or me, I make sure that we are comfortable and we can accept the worst-case scenario,” Doddanna says.
“Once you have that taken care of, everything you negotiate is a win, he adds. “Essentially, if that worst possible outcome were to occur, then I can play hardball because I’m not afraid of breaking it.”