THE ART OF NEGOTIATION IN REAL ESTATE
If you are a parent, then there is every chance you have well and truly mastered the art of negotiation. Trying to get your toddler to avoid a massive tantrum in the supermarket because they desperately want one of the carefully placed chocolates or toys at the checkout. You know the ones placed strategically just at their eye level, you never even noticed them before kids, stopping that meltdown requires a superhuman negotiation effort. Fast forward a few years and try to negotiate your teenager out of going to a party they are hell-bent on attending because everyone else is going! Again, herculean negotiation skills are required. You can probably stop reading this right now if you’ve negotiated your way out of these situations, but only if you’ve managed to retain your sanity and the kids have survived! Negotiation is such an essential skill in life and in the sales and property management industry and if you are buying, selling or managing a property negotiation is key to all successful transactions and relationships. Yet, no one takes the time to educate or teach it. I’m going to go out on a limb here and say that your negotiation skills are required almost on a daily basis. So, let’s break down the art of negotiation in real estate.
TWO MAIN AREAS OF REAL ESTATE NEGOTIATION
1. Management Fees & Commissions
New Landlord and new sales listing conversations rarely get finished without a discussion around the management fee, commission fees or a discount in the fees. Everyone wants a deal, a bargain, but more importantly, they want a degree of negotiation. If you stand hard and fast by the fees you want to pay and won’t budge, I totally respect that and good on you. If on the other hand, you are open to some form of negation there is an art to it. If you are a landlord you need to weigh up whether you are after a budget agency, and ultimately a budget service, or do you want a quality professional service with peace of mind? If you are selling, the difference between a percentage or two in the agent you choose could cost you a lot more money on the end sale price. Agents who charge a higher commission fee, generally work harder because their sales aren’t based on quantity of listings, but quality of listings. So, with less properties on their books, they have more time to dedicate to your sales process and contract negotiations. As a general rule of thumb.
2. Conflict and Disputes
Conflict and disputes are two of the biggest stresses property managers deal with. As landlord’s you make up one of the thirds in a property management dispute. While they can be very stressful and trying times, depending on the degree of the situation at hand, negotiation is key. There is rarely black and white in real estate, especially with the current legislation which is full of grey areas. In sales disputes are rare, but there are times when you may have to negotiation terms and conditions around a sale, not just the price.
THE TOP NEGOTIATION SKILLS YOU NEED
Become a good Communicator
To achieve your ideal outcome, it’s essential to clearly communicate what you’re hoping to walk away with and where your boundaries lie. You also have to be brave enough to step into the negotiation, and not shy away from it because of your fear of confrontation or offending anyone. Learning how to clearly articulate what you want and what you are willing to give and take on will make the negotiation far more effective and avoid any confrontation. Being a good communicator also means listening more and asking the right questions at the right time in the negotiation.
Understand Emotional Intelligence
Emotions play a role in negotiation, for better or worse. understanding your own emotions and being able to understand others is essential. Without a high degree of emotional intelligence you won’t be able to read other parties’ emotions. When you can read other people effectively this will enable you to more easily pick up on what they’re implying rather than explicitly stating. In addition to understanding what you and others are experiencing throughout a negotiation, emotional intelligence can help you advantageously manage and use emotions.
Planning is Key
Planning ahead with a clear idea of what you hope to achieve and where your boundaries lie is an essential step in any negotiation. Without adequate preparation, it’s possible to overlook the important terms of your deal. This is especially crucial when it comes to conflict and disputes. Make sure you know your legislation what does it say about the situation. Do you have all your evidence together and have you prepared what you are going to say? Have you made a stance or a decision on the conflict? Pre-plan this and the negotiation will fare so much better. This also goes for fee negotiations, go in with a plan on what you are willing to negotiate on and what you want. At the end of the day, you’ve got to have a bottom line.
Create a Win/Win Situation
A bit of give and take goes a long way in a negotiation. As we just discussed everyone wants to walk away with the biggest slice of pie, but the goal should always be to create a win/win situation. The goal should always be to meet in the middle of a dispute
Negotiation in real estate is an essential skill, whether you are a landlord or looking to buy or sell property. In fact it should be a life superpower as well. Being a good negotiator will also come in handy when you buy your next car, have kids, or travel overseas. So, if you are struggling in this department, it is time to brush up on your negotiation skills. Practise on some kids if you have to. Negotiating with teenagers is like a hostage negotiation on steroids, it is exhausting, emotionally challenging, and frustrating, but let’s save this rant for a different blog topic!.