Artful negotiation combines strategy, confidence, and a deep understanding of both market dynamics and human psychology. Because real estate agents navigate negotiations on behalf of our clients, honing our real estate negotiation skills can significantly enhance our business success and reputation. We’ve compiled our top nine tips and tactics for sharpening negotiation skills that will serve brand-new agents, seasoned pros, and everyone in between.
Expert tips for real estate negotiation
At Luxury Presence, we work with some of our industry’s brightest stars and understand the tips and tricks that set true expert negotiators apart. The following list of nine tips will help you navigate even the thorniest situations and enable you to find the win-win that closes the deal and solidifies your reputation as a master of your craft.
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1. Do your homework
Especially in the luxury market, thorough research is indispensable. You need to have an in-depth understanding of the property, its unique features, accurate comps, the local market trends, and the competition. This knowledge allows you to effectively position your offer or counteroffer and provide compelling arguments during negotiations. Information is, as they say, power.
Sketch out a comparative market analysis so that you’re armed with accurate data. This allows you to call out the advantages of your listing or use hard facts to explain why a lower number is appropriate for a property you’re negotiating to purchase.
2. Listen actively
Before entering any negotiation, it’s crucial to understand what your client truly wants and who the final decision-maker is. Real estate clients, especially in the luxury market, often have specific motivations beyond the basic need for a home. Whether they are looking for an investment, a vacation home, or a trophy property, knowing their underlying motivations will help you tailor your negotiation strategy.
The best way to make sure you understand your client is to actively listen: Pay close attention to what your client says and ask probing questions to uncover their true needs and challenges. This approach not only builds trust but also offers valuable insights that can be utilized during negotiations and helps to avoid misunderstandings.
This same advice applies to your interactions with the other side of the negotiation table as well. Here are some tips to make sure you’re listening actively and communicating clearly:
- Pay complete attention and don’t interrupt
- Paraphrase and repeat back what the other person is saying
- Take notes
- Ask questions to make sure you understand every nuance
- Refrain from making snap judgments
3. Build rapport and personalize your approach
Fostering a positive relationship isn’t just important when it comes to your client. People are more likely to negotiate in good faith and reach a mutually beneficial agreement when they feel a connection with the other party. Treat everyone involved with respect, timely communication, and professionalism.
Take this a step further by tailoring your communication style to match the personality and preferences of the person you are negotiating with. Whether they prefer detailed data, emotional appeals, or straightforward discussions, adapting your approach can make a significant difference. Consider mirroring their behavior, adopt the same level of formality, and ask open-ended questions.
Here are some personality types you may experience in your negotiations and tips for tailoring your approach:
- For analytical types — who tend to be polite but also reserved, logical, and fact-based — provide detailed data and thoughtful reasoning. Be precise and clear. Analytics tend to ask lots of questions, are good at controlling their emotions, and struggle to make decisions without all of the information.
- When you’re negotiating against a strong, get-it-done-whatever-it-takes driver personality, be direct, concise, and focus on the bottom line. Show confidence and efficiency, and don’t waste time. Drivers know what they want and are high energy, high performing, and hard working.
- When working with amiable types, build a personal connection, show empathy, and ensure they feel comfortable with the deal. You’ll know this personality type as they tend to be laid-back, seemingly to the point of indifference, and desire a peaceful environment. Amiables tend to shy away from conflict, value politeness, and can struggle to make hard decisions.
- Engage in open dialogue, use stories and emotional appeals, and emphasize the positive aspects of the deal when dealing with expressive types. Expressives function best based on relationships as opposed to tasks, are socially adept, and generally engaging and persuasive.
As you get to know agents in your area, keep notes in your CRM on how the interactions went and tips to remind yourself of their style when you negotiate with that agent in the future.
4. Be patient and persistent
Negotiations in the luxury market can be lengthy and complex. Patience and persistence are essential qualities for a successful negotiator. Don’t rush the process; instead, allow ample time for both parties to consider their positions and reach a well-thought-out agreement.
Here are some useful lines to have in your back pocket when you need to emphasize your patience:
- “I believe we can find a solution that works for both of our clients. Let’s take our time to explore all options.”
- “If we need more time to evaluate the terms, that’s perfectly fine. Let’s not rush this process.”
- “Feel free to take your time reviewing the offer and get back to me when you’re ready.”
- “Making sure our clients are satisfied is our top priority. Let’s proceed carefully to make sure we achieve that.”
- “We can revisit any aspect of the deal if needed. I’m committed to finding a solution that works for everyone.”
- “Let’s take a step back and reassess if needed. There’s no harm in making sure every detail is right.”
- “Our goal is a successful and smooth transaction for both parties. I’m willing to take the time needed to get it right.”
5. Utilize the classic anchoring technique
The anchoring tactic in negotiation involves setting an initial reference point, or anchor, which influences the subsequent discussion and final outcome. Either the listing price or first offer typically serve as the anchor in real estate negotiation, shaping expectations and counteroffers. Proper use of anchoring can lead to more favorable results, but requires thorough preparation.
To counter anchoring in negotiation, make sure you know market values and have data to justify your counteroffers. Reframe the discussion to focus on your own objectives rather than the initial anchor. Additionally, acknowledge the anchor without letting it dictate your response, and consider presenting a counter-anchor if necessary.
Here’s an example of how a seller’s agent can use anchoring in negotiation:
Seller’s agent: “We’re listing the house for $500,000, given the recent upgrades and prime location.”
Buyer’s agent: “That’s a beautiful property, but based on my research, comparable homes in the area have sold for around $450,000. My client is willing to offer $460,000.”
Seller’s agent: “I understand your point, but considering the unique features and current market demand, the seller is only willing to come down to $490,000.”
Buyer’s agent: “I appreciate that. How about we meet in the middle at $475,000, considering the minor repairs that are needed?”
Seller’s agent: “Let’s settle at $485,000, and we have a deal.”
Buyer’s agent: “Agreed: $485,000 it is.”
6. Use strategic concessions
Concessions are a natural part of real estate negotiations, but they should be used strategically. Offer concessions that are of low cost to you but of high value to the other party.
For instance, sellers might offer to cover some or all of the buyer’s closing costs, undertake specific repairs or upgrades identified during the inspection, or provide a flexible closing date to align with the buyer’s timeline. They could also extend seller financing options, include furniture or appliances in the sale, or purchase a home warranty for the buyer’s peace of mind.
Conversely, buyers might offer to waive certain contingencies, such as the sale of their current home or the appraisal contingency, to strengthen their offer. They may also consider allowing the seller to lease the property back for a specified period after closing, easing the transition process.
By strategically employing concessions, both parties can navigate negotiations more effectively, create a sense of goodwill, and move the negotiations forward. Stay nimble and creative, flexible and thoughtful, and the right play will come to light.
7. Offer reciprocity to build goodwill
The principle of reciprocity can be powerful. When you give something, the other party often feels compelled to reciprocate. Use this to your advantage by making small concessions to encourage similar gestures from the other side.
Let’s say a buyer has made an initial offer on a property that is lower than the seller’s asking price. In response, the seller might make a concession by agreeing to pay the buyer’s agent’s fee. This gesture demonstrates goodwill and a willingness to work with the buyer to reach a mutually beneficial agreement.
The buyer might reciprocate this concession by offering to expedite the inspection process or agreeing to be more flexible with the closing timeline. By reciprocating concessions, both parties build trust, which can lead to a smoother negotiation process and ultimately a successful real estate transaction.
8. Manage your emotions
Negotiations can be emotionally charged, especially in real estate, but it’s important to remain calm and composed. Managing your emotions and staying focused on the end goal will help you navigate challenges and reach a successful outcome. Be sure you’re doing the bulk of your negotiation over the phone or in person — so much nuance can be lost in text or email and tone of voice can be misinterpreted.
One of the keys to managing your emotions is to know your triggers. What makes it seem like your feelings are taking over? Once you are aware of these triggers and how they affect you, you can be prepared to handle them. Remember to always negotiate the position, not the person. If you can remain calm, keep relations friendly, and further communication, you will help keep everyone’s emotions in check and get closer to a deal.
9. Look for the win-win
Negotiation doesn’t have to be a zero-sum game. The most effective and successful real estate negotiators build value and look for win-win solutions.
Buyers and sellers need to feel comfortable with the deal they’ve struck, but you also need to work with your fellow agents in the future. When all sides of a real estate transaction feel good about the deal, you’ve protected your reputation, built lasting relationships, created a cooperative atmosphere, reduced conflict, and acted with empathy, transparency, and integrity.
Real estate negotiation + Luxury Presence
Mastering real estate negotiation in the luxury market requires a combination of strategic thinking, emotional intelligence, and professional expertise. As expert marketing and design professionals, we can provide all of the tools and resources you need to convey your expertise and professional brand and achieve outstanding results for your clients. Schedule a demo with us today to see how we can help.
