Is negotiation a lost art?

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• (August 31, 2009, 09:08:57 PM)

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[RebelBroker]

I have been doing real estate for a while. I have been looking back on my career trying to pin down the things I think I do well for some personal marketing I want to do in a few months.

This got me thinking about negotiation. I consider myself pretty good at it. I have used these skills in real estate, but also extensively in the corporate world when I was doing that.

If I had to try and pick the one thing that is the most overlooked skill in real estate today, I think it would have to be negotiation skills. So many agents are rigidly positioned inside the status quo box and put little, if any, prep-work into a negotiation situation.

Negotation skills, particularly in todays market, can mean thousands to your clients. But it takes effort. While some element of negotiating seems to be a part your personality make-up, the vast majority is just being observant, looking for needs and wants, and letting yourself come up with unique solutions to meet those needs or wants.

For instance, when I represent buyers, I do lots of upfront work before I write up an offer. I look into the history of the home, find out how long the current owners have been there. Find out who the owners are. Do they both work? Do they have hobbies or areas of strong interest? This can take lots of forms ranging from talking with other residents in the neighborhood to checking records through the title company or doing searches on their names on the internet. Even talking to their agent can be a great place to get good info on the sellers.  Of course, when the market was sizzling, there was little time to waste on so much preliminary work. If you did not act quickly, you might miss the house all together.

However,with todays market, it is much more important to do this upfront work in order to do the best for your clients.

When buying my own property, I have used these techniques of analyzing the sellers and the property and have managed to get good deals through unconventional means.

For instance, I had some sellers who were wanting to vacation between selling their current home and buying a new one. Well, I had gotten a special offer from my frequent flyer program to generate tickets for other folks. So I offered them two business class tickets anywhere in the United States including Hawaii.  I basically traded those tickets for a 10k drop in price. I had a friend with a boat sitting in his yard that he wanted to get rid of. He told me he would sell it for $800 - including the trailer. I traded it in a deal to get the price dropped by $5k. In both those cases, it was because I had found out things that the sellers potentially would believe they needed or wanted that allowed me to come up with these options.

Then there is just experience. We probably all develope a mental dossier on the agents in our area that we commonly work with. I get to know how they do things or don't do them. I know when they are bluffing or padding a situation.

But there seems to be a huge percentage of agents out there operating in complete ignorance of negotiation skill.

Now this works in my favor, when I work with these agents, I can usually get exactly what I want and leave them thinking they got what they wanted.

In all honesty, I have probably come across maybe two other agents that I consider to be "negotiators" in this business/

What is your experience? Is negotiation a lost art? Or is it simply that the market of the last decade minimized negotiation and with the market slowing we will see a resurgence?

R

[pikespeak]

I think you make a very good point. I find that we/Americans in general do not negotiate as effectively as we could on a day-to-day basis when purchasing items in stores or at the mall or when buying big-ticket items, except at auctions, where we can do as well as anyone.
We know when buying a car that there is a MSRP and our bargaining sense kicks in to beat the dealer. The same goes for real estate, and many buyers find a sense of victory when they can "beat down" the seller’s expectations of getting a fair offer.
My response to buyers and sellers is, if neither is happy with the sold price, it's got to be on the money.
Having lived in the middle east and experiencing the way of negotiating to purchase anything of value (especially rugs and crystal chandeliers), has served me well in the business of real estate. It is an art, and no one should ever interpret a low-ball offer as a personal insult, it's business. (I think Donald Trump is a good example of how to negotiate well in business).
Creativity by the agents and knowing buyers and sellers wants and needs are very important in closing a transaction and are probably one of the keys to success in this business.

[RebelBroker]

I see what you mean about Americans in general.

But it seems that even if our instinct to negotiate kicks in with real estate, it's not kicking in with most real estate agents. In the 17+ years since I first got my license, I have come across only a handful of agents who really negotiated - and man, can you tell the difference when your dealing with someone who is a negotiator!

I will be spending a week or so in Marrakech later this month - It will be a good chance to test my negotiation skills! 

R

[pikespeak]

HA! good luck and try to beat down the price on 23ct. gold where the profit margin is 10%. That's the real test.
Have fun in your travels and keep one hand on your wallet.

[RebelBroker]

Wow.... the whole art of negotiation was really displayed in Morocco.

It ran the gambit from the crazy jokers in the square to the slick rug merchants in more respectable areas.

There was a lot of shaking my head pronouncing the word "No" as clearly as possible as some just stuck their hand in my face for money they seem to think they had earned through some form of entertainment or other. Sort of the negotiating blunt instrument so to speak.

The rug guy was much more slick and polished. It was actually a pleasure to negotiate on that level.

The one thing that really hits you is how the entire community is designed to "get you" in Marrakech. They have been pouncing on unwary travellers for centuries and have a whole system in place to relieve you of as much of your money as possible. It is the same basic feeling you might get in any tourist trap kind of situation anywhere in the world, but taken to a whole new level. It was pretty amazing.

R

[pikespeak]

Those rug sellers know how to drive a hard bargain; we've got a number of rugs rolled up in the basement.
In '88 we were on the verge of going to Morocco from Algeciras Spain, but decided to go to Sicily and Turkey from there instead and I ended up with a job in Adana for a couple of years. Go figure.
Glad you made it back ok Robert.
When we went to Germany via the UK in September and we had to check our carry on due to size limitations, I lost an $800 watch, which was taken out of a leather presentation case. Someone could just as well have placed an explosive inside instead of taking/steeling something.
British Airways has the worst customer service, they have not acknowledged my letter or phone messages.

[frdsmth9]

People may have to sell your negotiation to others before a deal is possible. It's important you give the other side the documentation they need to convince the people they report to that they made a good deal in the negotiation.

[RebelBroker]

I agree, but that really is part of the 'Art' - isn't it? However, just laying out the hard data is not enough. The real negotiation is in making those numbers relevant and personal to the people you are negotiating with. If you just go for the unemotional approach, you are not going to get anywhere (with most folks anyway). So the skill comes in making those numbers really matter to the other side and also understanding how far you need to go with making them internalize what you are talking about. Some of these skills can be very subtle, but very important.

R

[Harry]

The secret to great negotiators is that they're great relationship-builders. They truly care about developing long-term relationships and helping the other side succeed.

[RebelBroker]

Helping the other side succeed?

I think I buy into the relationship building... you have to get some rapport going with anyone you are negotiating with, but I gotta say, the last thing I am really worried about is helping the other side 'succeed'. The bottom line is I want to get as much as I can for my clients while giving up as little as possible. Or at least only giving up things my client does not care about.

R

[Holoyarses]

I don't think negotiation is a lost art. To my mind, negotiation still plays different role in business, because it's a part of business and I can't imagine business without negotiation.

[michlele21]

very nice post.   I really like reading posts from well experienced brokers.

[RebelBroker]

I agree that negotiation is still there as a factor in business. Just like driving is a factor of every day life. My point was that there are folks who are excellent drivers and take that job seriously. Just like there are folks who are and are not so good at negotiation, but don't seem to be working to get better at it.

Good negotiation is a skill. One I have grown to be very good at. In fact, in just the last year, I can think of several situations where I saved my clients thousands of dollars through negotiation where with other agents the deal would not have gone through at all.

I know that is kind of tooting my own horn - but after the number of times I have seen other agents completely blow a deal for their clients, when a good negotiator could have kept things on track, I start to recognize just how valuable it is to be more skilled in that area.

R

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