I honestly wouldn’t have known how to cover this with knowing about Chris Voss’s book, “Never Split the Difference.” We do what we do and don’t often think of why it works when it’s natural. While I haven’t read the book, I’ve probably consumed more than 10 hours of podcasts and videos of him talking about negotiating. I saw the things our team does and trains to do and what other top agents do in that book. Go get the book or consume other media of his.
Negotiating in real estate.
There are a few different places where you need to negotiate specifically. Your commission, the offer, repairs, bad news and then everything in between.
Bad News
Chris dropped a great video right when the coronavirus quarantine started. It applies to delivering bad news of any kind. We often try to “soften” the blow by starting out with some niceties and slowly getting into the issue. He says to just deliver and called it what it is, bad news.
“Hey, Ron, we got the appraisal back and I’ve got some bad news. It was $12,000 short.”
Name the problem and then hit on the fears. “I know this will be tough on your sellers and you aren’t looking forward to the conversation.”
Let them say what they want to say. Hopefully, you have already had a conversation with your client about that shortfall. Let the agent know your position. Let them know you still want the deal to work out.
Commission
Your commission is based on your ability to negotiate. Remember how I said facts weren’t as important as a story? Chris also has a story about going to an important government body to work with them. He showed up and listed out his resume. Do you do that at your listing appointment? Sounds like the right thing to do but it’s not enough alone. He was laughed out of the room as I recall and it didn’t work. Few people care about what you did yesterday, what can you do for me today.
If you can explain how you can get those sellers where they want to be, when they want to be there, you have a shot. If you can explain what the process will look like and how you will get them through it, you have a shot.
Imagine to hiking guides. One tells you, “I’ve been doing this for 13 years. The hike will take 7 hours with two breaks. No one has a faster record than me getting through this hike. We will pass by some wildflowers and places to take pictures. Don’t leave any food out because the bears might smell it.”
The other guide tells you, “Thanks for coming everyone. I’ve taken a lot of groups that had various experience levels like this one lately. This will be fun! While this takes 7 hours typically, the time is going to fly by. I know just the place to stop for lunch where everyone will have a great spot to sit. There are some great stretches for some of the best pictures you have ever taken so hopefully you are charged up or save your charge for that. There’s 3 places were there are some rare flowers I will point out as well as a new eagles nest that just popped up last week. If you want the history of the area, stay close to me because I will be covering that during our hike. This is my favorite hike to take people on. Oh, and while I need to tell you to make sure to keep your food away when you aren’t eating, no one has seen a bear in 20 years here and I have bear spray.”
I made all of that up but which one is more interesting? Which one do you think you will have a better time with? Everyone thinks they know real estate until they get into the middle of it. Show them who you think will buy the house, what are some of the things for them to overcome, give them names of people to help them get the house ready. You are a guide, maybe even a sherpa, setting up everything and carrying the water.
The offer
In a previous lesson, we talked about presenting the offer. There’s also getting your clients to write or accept a good offer. You have to negotiate with them. This is one of the toughest battles. Everyone wants a deal. Sellers want top dollar.
I come back to emotion. It’s trying to get that person out of their own head and emotions and understand the other side.
“Writing a low ball offer just to see sets us up for more difficult negotiations later. They will take it personally.” Often they go logical and talk about money but that’s just back-filling with emotion. Low-ball offers do put the sellers in a defensive position.
“Well, Harvey, the feedback was that the price was not in line with the market. I think this offer is based on what they are seeing in the market.” Always make it about the market. Not your opinion of the price or the other side. That makes you a target and easy to get mad at. It’s not as easy to get mad at “the market.”
“We are only $1,500 apart. You are $1,500 from your goal.” This one will be worded differently depending on the situation. The real issue people get stuck on this number, which is a lot of money but not in the scheme of the price of the house, is because they feel they are losing. Remember in a previous lesson that people are hurt more by loss than gain. Remove the emotion and get them to the facts in this case. And I’ve seen many sellers proclaim after some price drops, “I’ve already lost X thousands of dollars.” In their mind, it was a loss but they never had it. That is a battle I just skip because it’s just rooted in so much emotion. I move to other things and get them to their goals and try to match the emotion there.
When I write offers where the clients can’t negotiate or I want them to look strong, I try to write odd numbers like $397,500 or $443,250. These don’t look like arbitrary numbers and I try to position it as we did our research and that’s the number we came in with. If you come to me and say, “We believe the house is only worth $375,000,” I don’t believe you and will more likely counter such a perfect round number just because. I get even more granular if I am adjusting the price for inspection repairs. Anything to look like it’s calculated as it may very well be.
You must make your client look solid. “Here’s the pre-approval letter.” That needs to be the exact number of the offer if you are under list price. It’s hard to give you a deal on the house when you are approved for more money and I have seen this bite some agents. Make your buyers look like they can‘t go any higher.
Make your sellers look like they can’t go any lower. “My clients just can’t accept this offer and pay for what they need to do on the other side. I’m sorry.” By the way, I’m sorry is the best line to use in many cases. It deflates the agent looking to pick a fight. It’s not a weakness and don’t use it to look weak. There are times when things need to be said and other times to just let them go.
Repairs
The short and simple thing I try to do here is getting everyone in the fairness mindset. The easiest deals were when everyone was trying to be fair. For the buyers, keep it to things you couldn’t see during a showing and important things. The ticky-tacky things drive sellers up the wall. If you ask for 10 items, you’re like to get 1-3. If you ask for 3-5, you’re likely to get most of those items. For the sellers, it’s just trying to get them to understand the validity of the repair or the validity that this needs to happen to keep the deal together.
Now negotiating with the other agent is something else. It’s trying to get them on your side and really explain why those things are important. Understand that many agents do ask for more than what they are wanting for as it is normal to negotiate
There are a million negotiations during a deal
Come with empathy, don’t battle, listen, ask more questions than they do, put the pressure on them to come up with the solutions, and be nice. And this is a nugget from Chris Voss that has sat with me from the time I heard it. “Never be so set on what you want that you wouldn’t accept a better deal.” I hadn’t thought of it like that but it has happened to me. I like to be the solutions guy but I’ve backed away from that over time because sometimes their solutions are better for me. Let them throw out some ideas.
By the way, split the difference is what 70% of agents do all day long. Expect it.
Exercise: Go watch these three videos by Chris Voss.
Do the work, get the results.
Next Lesson >> Setting Goals