They shared several best practices for real estate professionals when approaching contract negotiations, including how to:
- Identify the three types of negotiators, so you can anticipate their behavior and respond strategically.
- Utilize the ACCE Negotiation Methodology to collaborate with the other party for a mutually beneficial outcome.
- Build a reputation as a trustworthy professional whose listings and offers go to the top of the list because other agents enjoy working with you.
Corporate executives are trained to be good negotiators, but real estate agents rarely receive specialized negotiation training, even though it’s a skill they employ frequently in the course of business.
Numerous studies show that skilled negotiators who employ a collaborative negotiation style get consistently better results and build lasting and profitable partnerships. If that’s something you would like to achieve, try employing these tactics in your next negotiation.
3 TYPES OF NEGOTIATORS
According to bestselling author and Wharton Business School Professor Richard Shell, one of the most important things a skilled negotiator should do is evaluate and understand what type of negotiator they’re dealing with, and that doesn’t just include the opposing agent. You should assess and determine the negotiation style of your own client and the other agent’s client, as well.
There are three main types of negotiators:
Competitive (Win – Lose) Negotiator
A competitive negotiator is typically an unskilled negotiator who wrongly believes that in order for them to win in a negotiation, the other party must lose. They are motivated by fear, and their biggest fear is that someone is going to take advantage of them.
You will know you are dealing with a competitive negotiator when they employ tactics such as:
- Threatening to walk away if their terms aren’t met
- Presenting low ball/high ball offers or counter offers
- Setting unrealistically short deadlines
- Rescinding previously agreed upon terms
- Harping on a single issue instead of looking for a “big picture” solution
A competitive negotiator is only concerned about their needs and their ego. Any kind of information exchanged is a tool they are going to use against you, so beware.
Collaborative (Win – Win) Negotiator
A collaborative negotiator is often a skilled negotiator who understands that a collaborative approach will yield the best outcome for both them and their client.
As Richard Fisher explains in the bestselling book “Getting to Yes: How To Negotiate Agreement Without Giving In,” collaborative, or “win – win” negotiation is not about splitting things 50/50 or trying to achieve fairness and equality. It’s a method by which you seek to maximize your side of the transaction, adequately satisfy the other party, and marginally satisfy any third-parties involved.
You will know you are dealing with a collaborative negotiator when they employ tactics such as:
- Asking questions to assess needs and wants of the other party
- Setting reasonable deadlines
- Exhibiting positive emotions about the transaction
- Focusing on the entire package rather than single issues
- Establishing trust through offering something the other party wants
Compliant (Lose – Win) Negotiator
Compliant negotiators are rare, but they do exist. They attempt to avoid conflict at all costs. They need acceptance and fear criticism, and therefore will give away all items of power because they fear someone is not going to like them or be upset with them.
If you know for a fact you are a compliant negotiator, you shouldn’t be representing a client until you get the right skills and training to adequately negotiate on their behalf.
IMPLEMENTING THE “ACCE” NEGOTIATION METHODOLOGY
Once you’ve identified the style of all parties involved, you can use that knowledge to attempt to set a collaborative tone using the ACCE Negotiation Methodology, a system taught by instructors at the Real Estate Negotiation Institute.
Many untrained negotiators default to a competitive negotiation style because it’s all they know. But by showing your intent to collaborate, and attempting to establish trust, you can often sway the other party towards a collaborative approach.
ACCE is an acronym for:
Accumulate & Anticipate
Execute the Contract
Accumulate & Anticipate
“Accumulate” refers to the gathering of information. The negotiation style of all parties involved is a good starting point, but you will also want to gain an understanding of everyone’s interests and needs.
Why are they buying or selling? Do they have an urgent need to move? Are there financial stresses involved? What is their backup plan … are there other properties that interest them (buyer) or other offers on the table (seller)?
The more you know about the other party, the more likely you are going to be able to create an offer that they will be motivated to accept.
Of course, not everyone will be willing to offer up this information. That’s why it’s essential to develop your accumulation skills:
- Gathering Information: Learn to ask questions in a conversational tone so you can get a good dialogue going back and forth, and uncover helpful information in the process.
- Identifying Value: What can you offer that won’t negatively impact your client? A quick closing date? A leaseback?
- Exploring Options: What if my buyer was willing to go to $295K, would your seller be willing consider that?
- Building Trust: Being the first to offer something of value can establish trust, and theref
“Anticipate” refers to issues that inevitably arise and have the power to derail your negotiations. Be prepared and have a contingency plan in place to get things back on course.
According to Robert Mnookin of Harvard Law School, “it is necessary to probe beneath stated demands and positions and ask what is actually important to the other side and what do they value.”
Inexperienced negotiators often believe that money is the only motivating factor in a negotiation, but many times it’s not. The purchase or sale of a home is a highly emotional experience, and buyers and sellers are often motivated by factors that are unstated.
For example, a seller may desire to see their home go to someone who will appreciate and maintain the porch their grandfather built, or a buyer may have envisioned being settled in their new home in time for their daughter’s first birthday party. By discovering what truly motivates the other party, you can offer concessions that are valuable to them while costing your client relatively little.
Claiming value is about “dividing up the pie,” or deciding who gets what. This takes a delicate balance of assertiveness and cooperation. This is easier if all parties are forthcoming about their limits and desires.
Skilled negotiators know how to exchange items of value using ethical persuasion techniques. For example: “I noticed from the pictures on the wall that your sellers have school-aged children. My buyers would be willing to wait until the school year is over to close if your sellers would be willing to convey all of the appliances.”
Execute the Contract
After you’ve reached an agreement, it’s time to execute the contract. Be sure to use clear language, set milestones, communicate frequently and continue to approach any roadblocks that come up with a “win – win” mindset.
In a true collaborative negotiation, both parties have a vested interest in seeing the transaction through to closing.
BUILDING A REPUTATION AS A COLLABORATIVE NEGOTIATOR
Becoming a skilled negotiator will not only help you achieve better results for your clients, it will help you build a positive reputation amongst your fellow agents as someone from which they want to “sit across the table.”
Realtors hold a lot of sway with their clients. If they negotiate a transaction with an agent who is overly contentious, or gives their clients a “raw” deal, they are not going to be excited to work with that person again. In fact, they may even caution their future clients against transacting with you and your clients, and rightfully so.
On the other hand, if they find you to be fair and trustworthy in your negotiations, and their clients walk away happy with the deal that was structured, they are going to be eager to work with you again. Which means an offer from you will get looked at first, and a listing with your name on it will get shown.
By implementing collaborative negotiation techniques, and striving for a “win – win” in every scenario, you will set yourself up for profitable working relationships with your fellow agents … and long term success in your real estate career.