If buyers and sellers are wondering why they need a real estate agent, it is for their negotiation skills; look for one who can demonstrate their skills instead of being fearful the deal will buckle and fall through. What makes up a skilled professional is their ability to close a deal from a first conversation with the other party, their ability to find an agreement on the terms as well as create a happy client the day after closing. The most skillful agent will never narrow negotiations down to just one issue (the price), because this allows for one winner and one loser versus both winning.
Prior to negotiating, the Realtor should establish criteria by asking the right questions to uncover the primary objectives and goals of the buyer and seller, i.e., financial needs, potential future relocation, cash needed to close, closing date, persons living in the home, kids, physical additions needed to the property, and more.
Three Win-Win Contract Negotiation Strategies:
The Nibbler – A buyer may “nibble” to obtain most what they are asking for by making the seller feel cheap. As the name explains, the buyer nibbles a bite here and a bite there — slowly getting everything they desire from the seller. Example: The buyer is purchasing a $2,000,000 home and asks for a new roof, stating to the seller’s agent and seller, “Oh, come on — I am purchasing a $2,000,000 home from you, what does a new roof cost?” One by one, the requests come in nibbling away at the seller’s profit.
Seller remedy: Do not allow this. Sometimes sellers are so eager to liquidate the property and will meet the added conditions to complete the transaction. Stand your ground and be willing to walk away in your mind, and your confidence will win most every time. If the buyer gets one large request granted, he will forgo the small stuff but will need to be told “no” to end the nibbling cycle.
The Hurdler – A buyer uses a “Hurdle” strategy when the buyer expresses details about a difficulty they are facing that will keep them from purchasing the home in question, and throws the problem into the hands of the seller or listing agent to fix. Example: The buyer is purchasing a $2,000,000 home and does not have quite enough money for a down payment, a personal issue is holding up the deal or the buyer does not qualify for that price at all. The buyer may have a “liquidity event”.
Seller remedy: Say no and hold your ground. In this scenario, the buyer’s challenges are passed on to the listing agent or seller and can be eliminated by standing firm and working through the challenges one by one. Financing, personal issues, commissions, roadblocks and delays are all examples of issues that this “hot-potato” scenario become the seller’s problem. Address the issue directly and logically, and hand the challenge back to the person responsible for it.
The Good Cop/Bad Cop – Where the agent is the good guy in the relationship and the seller is the bad guy or vice versa. Hiring a real estate agent is a way to protect buyers’ and sellers’ interests, as well as to provide a buffer from possible confrontations during negotiations. Example: the buyer is purchasing a $2,000,000 home and has a running list of requests for the seller. The agent is accommodating, declaring the deal can be worked out, but every request seems to be vetoed by the seller only to be countered again. This tactic exhausts the buyer and their efforts, and they begin to withdraw.
Seller remedy: The success of this negotiating tactic is to allow the buyer to get one or two of his requests through. If the buyer feels they are not moving forward in any way, this tactic will truly sabotage the deal. However, done correctly, the buyer will feel as though someone is on his or her side, that he or she is making progress.
In the end, having a broker who is skilled, patient and prepared to walk away from the wrong deal is the right choice. Look for a Realtor who has years of experience and results. They are seasoned and usually are not in it solely for the commission. Negotiating is what drives them and they thrive on the best deal. The best negotiators are worth their fees and generally net you the highest payday.