Mastering Real Estate Negotiation in Today’s Market

Welcome back to Mike Ferry TV. My name is Tony Smith, coach and speaker for the Mike Ferry organization filling in for Mike this week. All right. We’re going to talk about something that’s very important today that maybe hasn’t been super important for some time. We’re going to talk about the skill of negotiating contracts … negotiating. Okay. So, one thing we know is in North America over the last 18 months to two years, the number of properties that are expiring from the market has increased. The number of listings that are canceling has increased. The number of transactions that are falling apart. Falling out of escrow has dramatically increased. The number of properties that are being put back on the market has increased. And all of those things are obviously part of the supply and demand issues that we’re experiencing today. You know, if the supply goes way down and the demand goes through the roof, what kind of negotiations are really necessary? Okay. Um, red hot, a little bit of a frantic market. You either take it or leave it. Um, write us an offer over asking price or you have no shot, right? Um. I want more money. I want more money. Uh, I want to sell my house for more money, okay? And you get the money. So, negotiation becomes a little bit less of an issue when the supply and demand ratios are way off. Okay. When you get into a normal market like we’re in today, becoming a strong negotiator is more important. Or we have lost transactions and lost money because of it. All right. So, you have to appreciate this, uh, right now, is it pretty natural for a seller to still want to get top Dollar top prices that they heard about over all these years. Okay. And then with prices and interest rates and the change in the economy, um, isn’t it natural for a buyer to want to get a lot better bargain today than they had been getting? It’s very natural. So, the conflict between the buyer and the seller is pretty big. There’s a disagreement. And if there’s a disagreement, then our ability as a great agent to negotiate becomes more important.

You know, in typical Mike Ferry fashion, when I decided to present these points, I went to the dictionary and looked up the definition of negotiating. Okay. Negotiating to try to reach an agreement or a compromise by discussion with others. Negotiating to try to reach an agreement by talking with others. That’s really what it is. Okay. So, in our world, we’re listing and selling real estate. There are negotiations that take place, right? You just have to really recognize it. If you’re only going on a listing presentation once every 2 or 3 months, if you’re only being exposed to the negotiation of presenting an offer once every four to 6 to 8 weeks, then your negotiating skills don’t get practiced that much, do they? And if they don’t get practiced that much, and if you lose a transaction simply by your inability to negotiate the deal, it’s very expensive, right? Mike Ferry trained agents. This this topic negotiation is one of the biggest reasons why Mike Ferry trained agents succeed at a higher level in a normal market. Because we, the coaches, the system, Mike, the structure will cause them to get back involved with heavy negotiating skills and they put their deals together. Other. So, we win at a higher level, don’t we? All right. So, I want you to really think about that. Here’s some points to consider when it comes to negotiation.

1) Practicing negotiation is part of your job

The first point that I jotted down was practicing negotiation is part of your job. Okay. So, think about these negotiations. There’s actually a negotiation when it comes to presenting to a seller and negotiating that they list it at the right price. Pricing property. Uh, there’s a negotiation that takes place when you negotiate with a seller about getting a price reduction. Okay. There’s a negotiation, obviously, about presenting an offer and getting an offer accepted between a buyer and seller. That’s a negotiation. But should we all be practicing these things a little bit? You know, I think we should practice some of these negotiations. If we practice them, when we get in a live situation, we’re going to be that much better, that much stronger at our negotiating skills. It’s interesting because Mike would tell us all that most people, when you ask them if they’re a good negotiator, they say, yes, of course, I’m a great negotiator. And the truth is, most people aren’t. It’s a sales skill.

2) Setting the proper expectations for your seller or buyer is a critical step in winning negotiations

Look at point two. Setting the proper expectations for your seller or buyer is a critical step in winning negotiations. Setting the proper expectations you know, is now the time where you will list a property and promise to the seller that this thing is going to be sold in two days. Pack your bags, you’re going to get top dollar. That doesn’t help the negotiation, does it? Right. Um, let’s do this. Well, let’s wait for all the multiple offers to come in, and then we’ll pick one. We’re already building a wedge between the seller and a good negotiation. So how about this thought? Gosh, Mr. Seller, now that we’ve listed this property, I’m going to recommend something to you with my aggressive marketing plan if we get a lot of showings and no offers. It’s been proven that we’re 5% overpriced. Okay. And then also with my negotiating skills and my strong marketing techniques, if we get little or no showings at all, it’s been proven that we’re 10% overpriced. So, we should pay a close attention to the showings over the next two to 3 to 4 weeks, shouldn’t we? Let’s. Let’s put me to work. Expose your market to the public and to all the other great agents. And let’s see how the marketing and your property responds to the market conditions. That’s a little different in setting expectations, isn’t it? So, question for you. Are you practicing your skill of setting the proper expectations with the buyer and the seller that we have? Mr. seller, in today’s world, can you appreciate that the buyer’s confidence is a little down from what it used to be. B. And were you aware that the number of homes for sale has actually doubled? If there’s twice as many homes for sale, is it natural to expect that a buyer will maybe not have to accept the physical condition that they used to? So, if there are things that show up on our physical inspection that need to be done, we have to take a close look because the buyers could simply cancel and move on, couldn’t they? Is that what you’re looking for? We have to set the proper expectations with our sellers and with our buyers. All right, look at this. Okay.

3) Sales is in a very emotional for the buyer and the seller

So, number three on this list, a sale is in a very, very emotional thing for the buyer and the seller. Like, we can’t argue with the fact when it’s time to pack up your stuff and move as a seller, that can be very emotional. And of course, buying a home is a very emotional thing. If we want to become a great negotiator, we have to learn to control our emotions throughout the process. We have to have very, very controlled emotions. Mike would say you need to learn to keep your emotions between the lines. So do you get overly emotional when another agent writes an offer that’s under your list price? Do you get mad at them for doing that? Do you get over emotional, uh, personally when the seller says just reject the offer? We have to become the calming force in every situation for selling. It’s part of being a good negotiator. To be the calm, cool and collected person in this dramatic situation for the buyer and seller. It helps.

4) Raising the sales price or lowering your commission can be one technique of negotiating

Look at this. Number four I wrote down. Raising the sales price or lowering your commission can be one technique of negotiating. I don’t recommend it. Okay. You and I both know that we can, you know, just simply raise the price, okay? So, you want 550,000. Let’s go ahead and give it a try. You know, we can always get a listing by just raising the sales price or lowering our commission. Right. That is not good negotiation. Let’s practice using the other techniques that we teach to have a seller understand the right price and the right commission to get the job done. Okay, let’s not put our commissions into this deal when it comes to negotiating for sure. All right. Would you be better served to spend some time practicing negotiations, or would you just want to keep giving in your commissions? I think we should practice.

5) A good negotiator understands that asking questions versus making statements is the best approach

All right. Look at five. A good negotiator understands that asking questions versus making statements is the best approach. Okay. Telling a seller about the offer. Telling a seller versus asking the seller. We have to really understand. And there’s hard questions that need to be asked. I wrote down how much more proof do you need that your asking price will not attract a buyer? That’s a tough question. We have to be willing to ask questions like, how much longer do you think it will take to get the next offer? If it took us 45 days to get the first one, that’s a tough question. If we aren’t able to get this transaction together today, how much longer do you think you’ll have to wait before we get another opportunity to sell your home? It’s a tough question, but there are questions. If you want to become a good negotiator, you focus on asking the questions instead of making the statements. Once again, practice these scenarios.

6) Focus on the seller and or buyer’s motivation and what’s best for the clients at all times

Hey, look at number six. Focus on the seller and or buyer’s motivation and what’s best for the client at all times. Okay, if you want to become a good negotiator, we keep the seller’s motivation or the buyer’s motivation in the forefront at all times. Mr. or Mrs. Seller, we’ve got an offer today and based on what I know you want, this offer is one step closer to you getting to those grandkids that I know you want to so badly. So let’s work on the offer, shall we? We keep their motivation and their best interest at heart. You notice if the seller or the buyer even get the slightest impression that you’re only interested in yourself or your commission. They’re going to fight back, aren’t they? They’re going to want to fight. If they get this like you’re in it for your commission. I want to hear it. We hear these kind of things. It sounds like you’re just working for yourself, or you’re just interested in the buyer. It sounds like you don’t have our best interests at heart. Those are signs that your negotiation has been not question based. It has not been focused on what the client needs. It has not been focused on their motivation. And you haven’t been asking questions. Okay. You have to learn to be unattached to the outcome. Okay. We can be very, very attached to our effort. Am I practicing? Am I putting in the effort? Am I asking the questions? But we have to be unattached to the outcome. Good negotiators are not attached to the outcome.

7) How big are your gaps between negotiations?

How about seven? How big are your gaps between negotiations? I mentioned this earlier. To become a good negotiator, we have to learn to do that all the time. And if the gaps are pretty big, then this next negotiation that you have, this offer that’s coming in, whoa. It’s a big deal. And then it’s really hard to be unattached. It’s really hard to ask questions. And we jump in and we can mess it up. So we have to recognize that we have to narrow the gaps between negotiations. Why not practice negotiating in your day-to-day life? Practice negotiating, uh, with the with the waiter or the waitress about please. Would you share with me what’s the best meal on the menu today? Right. Um. Why do you like that meal so much? Why is that your best choice? Checking into a hotel. Um, are you in control of which rooms you assign me now that I’m checking into your hotel? You are. Great. Then what I would like to ask is, could you please assign me the best room available for my stay here? It’s negotiating. Are you okay? Doing some negotiations in your day-to-day life. So the gaps aren’t too big. Okay.

8) Focus on a win situation

Now, Ade, I wrote down, and this is. This is an interesting one. If you if you read a lot or study negotiations, a lot of the philosophies are out there is somebody wins and somebody loses. A good negotiator is the guy that can get the edge over on somebody and hold their throat like that, right? That’s not really the approach we recommend you take. Okay. Um, focus on a win situation. A lot of real estate transactions that go together honestly is a great situation for the buyer and a great situation for the seller. Now, that doesn’t mean that everybody’s happy all the time. That doesn’t mean that they they go out feeling like they won the lottery. But it means that that there is a common ground that we’re looking for, which means that we probably should look at both sides of the transaction. If I represent the seller and another agent brings the buyer, I would probably like to ask that agent a lot of questions about this buyer. What’s their motivation? What’s their desire? What do they like most about this house? How many homes have you had to show them? Were there any challenges so far in your process and helping them get a home? What’s the biggest fear you have about the buyer and them buying a home? Right? And if you ask a lot of questions, you can bring some of that value to the seller and have them see the other side of the coin. And it helps your negotiations. There can be a win win. Focus on it, right?

So it’s pretty simple and straightforward. Uh, we want to reduce the amount of deals we have falling apart. We certainly want to reduce having any expired listings, any of our listings, cancel any of our sellers withdrawing. We know we can’t win all the time, so that’s going to happen. However, if we spend some time practicing, if we spend some time studying this, then we can win more of the negotiations that take place. It is a sales skill. For those of you in Mike Ferry coaching, go to the chapter on negotiations, blow the dust off of it, study it and talk to your coach about it. For those of you that are not in coaching, maybe you should consider joining us because we’ll help you become a better negotiator so you can have more transactions and make more money. Thanks for your time.