The Basics of Real Estate Negotiation

Negotiation is a science of social engineering, but it can also be considered an art by the way some people have mastered it. Further, some people say the real estate business is full of sharks, because they only eat what they kill. Or rather, real estate is a business where the majority of it’s workers don’t get paid unless they make a sale. The most successful Realtors are often the best negotiators, because they don’t just sell houses, they sell themselves. If you want to level the playing field, you’ll need to learn how to negotiate using the same tactics they use.

Never show your hand

You can be the silent type, you can act dumb and clueless, you can do whatever you like, but DO NOT show your hand to the opposite party. As I will discuss on my next point, negotiations are all about trying to dig up as much information as you can to alter the playing field in your favor. If the opposite party asks you a question that you know will hurt your negotiation power, such as a seller asking you the buyer “Well how much are you looking to purchase a house for?”, you should flat out decline to answer the question or simply reply with a vague response such as “I’m looking for something around your price range” or even bluff them and claim you can’t afford that house unless they drop the price.

Information is power, so be quiet and listen

Just as you should never show your hand, you should know when to keep your mouth shut and listen to see if you can catch the other party slip up and tell you anything that will give you leverage in a negotiation. If for example you were a buyer and the seller’s Realtor slipped up (or possibly wasn’t informed by his client not to disclose certain information) and said that the seller was moving to another state for a new job opportunity in two weeks, you could use this information against the seller to force a lower price because you know the seller probably has an urgent need to sell the property quickly so he can move into a new home in another state.

Use reasonable leverage when applicable

As stated above, when you’ve got vital information (blackmail excluded) against the opportunity, by all means use it! It’s okay to flex your negotiating muscle, just remember not to choke out the other party with leverage. It is entirely possible to kill negotiations by coming off to strong, whereas subtle increased use of leverage throughout negotiation would yield you the same outcome without the other party feeling so overwhelmed and possibly turned off by the negotiations. For example, lets say you were a seller and knew the buyers had a lease on their apartment that was about to run out soon, couldn’t sign a month to month lease with their landlord, and desperately needed to close the deal as quickly as possible so they could move into your house. Instead of bombarding them from the very beginning with talk about how they’re going to be out on the streets if they don’t accept your price and terms, you can simply nudge them in the right direction by reminding them of their current predicament when they are reply to you with any hesitant objections or disagreements.

Leave emotions out of it

The other party is not your buddy or your enemy; negotiations are all about business, you can love or hate each other after a deal has been completed. If for example the other party is being extremely friendly to you, they may be doing this to win your trust or gain leverage in a multitude of ways, but regardless of their reasons (perhaps they are just genuinely friendly and have no agenda), when the polite rapport ends and the negotiations begin, it’s simply you and the other party who only want to make as much money as possible. Or if the opposite occurs where they anger you, or possibly belittle you (often a trick car salesmen use), simply remind yourself that these are all just tactics they are intentionally using on you in hopes you will lose your rational mindset and let your cloudy emotion filled mind take over.

On the other side of the token, don’t be afraid of hurting the opposite party’s feelings either! So many people are afraid to bluff, to lie (when legally allowed), or to low-ball someone because they are so afraid of what the other party will respond with. Who cares!? Negotiating is business, and the goal is to get the most favorable deal you can, not to make friends or ensure you don’t offend anyone.