There’s talk lately of markets that are experiencing multiple offers. Maryland, Phoenix, Ariz., Seattle, Wash. and Boise, Ill. are watching inventory drop and offers heat up!
As we watch this trend, we couldn’t help but think of a critical skill when it comes to multiple offers: Negotiation. Negotiation is a skill that can be learned and perfected with experience. Finding which needs are fixed and which needs are flexible is crucial when you’re working to secure the best possible outcome for your buyers and sellers.
We pulled together some best practices for negotiating and bringing the buyer and seller together; it’s called the Three P’s Approach.
Preparation is the key to building confidence and ensuring a smooth negotiation process.
Think and act strategically
• Know your goal. Have a clear goal in mind for the negotiation, which is to reach a win-win agreement. A win-win agreement means that both the buyer and seller are, at a minimum, satisfied with the outcome of the negotiation process. Remind your client of their reason(s) for moving in the first place, and that when the contract closes, they’ll be able to move on with their lives. Keep them focused on their motivation.
• Know your client. Make sure you fully understand your client’s goals. Learn in which areas they are willing to negotiate and where they will stand firm.
• Think ahead. Anticipate what the other party wants out of the negotiation. Write down how you think they may counter the offer and how you plan to handle it.
• Set clear expectations. Prior to meeting with the other party, set clear and realistic expectations with your client. Aim to always under-promise and over-deliver. Stress to your client the importance of moving quickly to create a sense of urgency.
• Be informed. An informed mind is an empowered and confident mind! Ask open-ended questions and use active listening to find out as much as you can about the other party and their agent. This helps you know with whom you are negotiating, on what points you will negotiate, and where you and your client have leverage.
Comply with regulations
• Obey the laws. Every state and locality has its own set of laws that regulates zoning, mortgage qualification, and other real estate matters. Stay current on your local regulations and stay out of court!
• Know the documents inside and out. Become familiar with your local Board of Realtors’ governing forms. Take the time needed to understand the form templates and what belongs in each field.
Keep reading for No. 2 and 3.
Move into the negotiation process by stating your current offer to the co-op agent and listening to the response.
Guidelines for presenting the offer or counteroffer:
• Call the co-op agent to let them know the offer or counteroffer is coming, then invite them into the buying loop in eEdge where they will be able to view the offer contract.
• Pay attention to nonverbal cues. While it is not always possible or practical to make your presentation in person, a face-to-face meeting allows you to analyze body language and facial expressions. Otherwise, present your offer by phone and listen for verbal cues.
• Keep quiet once you present an offer. Sometimes, letting the other person do most of the talking is the most powerful negotiation technique because of what they will reveal.
• Listen carefully to what is important to the other party. Write down what they say to demonstrate that you are taking them seriously, and then move on.
• Stay calm and relaxed. Either party may have a strong emotional reaction to the price or other terms of the offer. Be a calming influence until they are able to see the situation rationally again. Remember—you are there as a representative for your client. Keep your emotions out of it.
• Focus on the customer’s needs. Isolate the objections of both sides and offer solutions that will satisfy the other party while still meeting your client’s core needs.
Positioning is moving both parties closer to each other until you have full agreement.
• Acknowledge the common ground—where the buyer and seller are in agreement and are at the same position. Then, identify which positions may be easily adjusted and which are set in stone.
• Ask “what” and “how” questions to better understand the other party’s values and why certain things are important to them.
For example, say you represent a seller who wants to close in thirty days. If a buyer wants to close within sixty days, ask your client:
“Mr./Ms. Seller, you are requesting a thirty-day closing. What is important about closing in thirty days?”
Practice Your Positioning:
1. Choose a partner. One person will play the buyer agent and the other will play the listing agent.
2. Take a few minutes to review the scenario and information under your role.
3. Using what you’ve learned so far in this session, take 1–2 minutes to prepare for negotiation.
4. With your partner, practice a negotiation. Go back and forth two times, both aiming to arrive at a win-win agreement.