An Effective Negotiator
January 24, 2017 |
Publisher, Arizona Journal of Real Estate & Business
The word contract gives most people thoughts about a long, grueling process that requires tedious review and attention to detail. However, there is another side to contracts that involves a much different skill set: negotiations. Typically, some form of negotiation takes place before a contract is executed regardless of industry or business type.
You may have heard of the reference ‘the art of negotiation’ which implies that the components of art are needed to be an effective negotiator. Art is formally defined as the application of human creative skills and imagination. How that creativity and imagination is used during the negotiation process can vary from person to person. According to one of the top negotiators in our time, the late Nelson Mendela, key attributes for effective negotiations include patience, tenacity, pragmatism and strategic thinking.
I asked a few real estate leaders in the Phoenix metro community who work in residential, commercial and law to share their viewpoints on what makes an effective negotiator. Although these leaders work in different sectors of the business, their responses show that creativity is used in combination with some common fundamentals.
Ari Spiro, Managing Principal
Know Who You Are Dealing With/Research
A little bit of research on the front end can go a long way. Research who you are dealing with and check references. Find out what they have purchased in the past and who they have previously worked with. Talk to the brokers that the parties have worked with. At the very least, review their website. If given an opportunity to talk directly with them, do so. You can learn a lot about the personalities from a phone call. If nothing else, you will get a sense if they seem like a more methodical-type person or a rapid fire communicator. This knowledge can be crucial later in the negotiation. A day delay with one type of personality might be more disconcerting than a three-day delay with another. With the availability of technology, there is no excuse to be uninformed about the person who you will be involved with in negotiations.
Keep The Momentum/Communication
A potential downside of technology is that we are in the age of 24/7 communication — or at least many people have that expectation. “Time Kills All Deals” is an old adage in our business. Prevent parties from unnecessarily dragging their feet. Too often, deals can derail just because it takes too long, enthusiasm wanes and deal fatigue sets in. A former manager said to me once, “the best deals start slow and speed up, they don’t start fast and slow down.”
Keep It Simple/Focus
A major part of momentum is keeping it simple. If there are multiple issues, tackle the deal killers first. If there are fifteen issues and three are deal killers, don’t start a long back-and-forth process. Try to tackle all fifteen simultaneously, solve the three major issues and the remaining dozen will usually fall into place.
Bobby Lieb, Arizona Top Producer Associate Broker
Court-Appointed Real Estate Commissioner
Be An Expert/Know Your Subject
It’s very important for an agent to know the area values of the home(s) they will be negotiating on. Clients you’re representing will automatically feel you’re working on their behalf and that builds trust — something that’s very important in the negotiation process.
Always Be Honest
Don’t negotiate what is best for you as an agent (e.g. commissions), but look out for what’s best for the client. This is a long-term business and if you sell out on the client for one deal, it will impact future deals and your reputation. Phoenix metro is a very small, big town.
Know The Other Party
I believe it helps to know the agents who are on the other side of the negotiating table of the transaction. I treat these agents with respect even if they are competitors. It makes my negotiations easier when I have done deals previously with the agent on the other side — knowing their temperament and style is an advantage.
Be A Mentee
The most successful agents in the Valley all had mentors. An agent who is experienced in negotiations can help someone new to the process. You don’t want to say anything that may come back to haunt you a year or two later.
I’ve worked on behalf of the Court for over 20 years and sold over 500 homes. As a Court- Appointed Real Estate Commissioner, psychology and negotiating skills are used in the process. I’m the middle man between two people, husband and wife, who typically hate each other. It’s important to stay neutral and hear both sides — since it’s a delicate back and forth exchange. Trust is a big issue between the two parties, so it’s my job to have both parties trust me. I build trust by always being professional, positive and focused on the sale. I also ensure I don’t repeat negative remarks said about the other party — this helps get to the end result and not cause unnecessary turmoil.
Don Miner, Real Estate Attorney
Objectives Of The Client
Prioritize the client’s objectives in order of importance. I want to do as much as I can to help the client achieve their legally permissible objectives. It is important to listen in advance during client communications and ask questions to be sure the objectives are understood and in what order of priority. Inform the client that negotiations are by nature a give-and-take process and some objectives may not be achievable. Knowing those most important objectives upfront and their priority is a prerequisite for success.
It is also wise to ask a client what substitutes would be acceptable if negotiations do not result in achievement of certain objectives. If a stated objective is not available, one or more substitutes may allow the transaction to proceed. What are the “deal breakers” that would make the client not want to move forward? Purposeful communication and instruction from the client is essential.
Objectives Of The Other Party
Prioritize the objectives of the other party in order of importance. Knowing the prioritized objectives of the other side allows for analysis as to which objectives of both sides are compatible, or with some creative thinking, might become sufficiently compatible. This information also provides insight for strategy regarding potentially acceptable substitutes that could meet the other party’s essential needs — and allow the deal to move forward. For those objectives that are simply not compatible with your client’s objectives, it may be possible to explain to the other party why her/his objectives are not achievable; however, further explain why the transaction should nonetheless proceed.
Information About The Other Party And Her/His Negotiator (f different from the party)
Knowledge about personality, character, likes, dislikes, the timing under which they are operating to conclude negotiations, and topics/issues that should not be brought up with other parties. All of this can assist in finding common ground and build a relationship that will enhance a positive outcome.