You have just sold a house in a prestigious suburb, at what you think is a good price.
The vendor had negotiated a lower fee with you already.
After the event, you feel that you had put in more than the fee warranted, but the vendor said they could have got a higher price for their property.
Does this sound familiar?
How often have you felt your client has taken advantage of you?
Have there been times when the vendor feels the same way?
It’s common to hear vendors complaining about how quickly the salesperson buckled or took the first offer from a buyer.
That the agent did not fight hard enough for the vendor.
Just as often we hear about salespeople complaining about vendors wanting to get more out of the salesperson, at minimal or no cost to them.
So how do we resolve this issue?
Is it worthwhile for both parties to spend more time negotiating a deal that makes everyone satisfied?
The answer is a resounding ‘yes’.
A lot of negotiations depend on managing perceptions – yours and the clients.
Here, I am going to provide strategies and processes you can use or adapt in your negotiations to make sure you and the vendor both walk out of the deal satisfied with the outcome.
In contrast to the scenario above, think back to a deal where you paid top dollar when you bought something, had to negotiate a deal which was higher than what you wanted to pay, but you felt you got a fair price, even though you paid a bit more?
You were very happy with the outcome.
We all know it can be a problem if you don’t give the client what they want, especially when they have multiple options available.
This problem can be resolved negotiating – not like a salesperson, but as a negotiator.
Believe me, the mindset and persona are totally different.
The real question is, how do you get your client to this space where they are happy to retain you, pay you more than they would pay another agent and, importantly, maintain a good long-term relationship?
The first thing to be aware of is that being soft on your fee or equally, being super aggressive on your fee, does little to enhance your long-term reputation.
What do you do not only to identify how far you can push your clients, but how to keep them happy while doing this?
KNOW WHAT YOU DON’T KNOW
Think about what you don’t know about the vendor, the property, recent sales, benchmarks, new zoning developments, and economic insights about the area.
Most agents do not spend enough time investigating and pay the price at the bargaining table.
Remember, you do this to find new information so you can be seen to be different from your competition.
It also gives you leverage.
WHAT DO YOU ASSUME?
There are several key assumptions that you need to review, and they make for a creative framework in negotiating.
I advise agents to write them out before a meeting.
• Why do you think they are really selling?
• Will a quick settlement motivate them or not?
• What’s their risk profile?
• What is their property worth?
It’s also important to think about the assumptions the vendor has about you (your expertise, experience, your ability to get desired results), the market and any other factors in play.
Without taking into consideration these viewpoints, you are only negotiating from a one-dimensional position, with few options when the negotiation becomes challenging.
When meeting the vendor, ask questions to find out the validity of your assumptions.
This is not the time to negotiate.
Avoid asking direct questions with absolute answers.
Asking indirect questions reduces the psychological resistance from the vendor, allowing them to trust and open up to you.
Questions like these will encourage conversation:
Where do they plan to go to next?
What are their views on the market?
What changes have they seen in their area?
A key psychological trait is that people love to share their knowledge and insights.
Hence, these questions allow the client to feel appreciated and heard.
It also provides the client with the ability to impart their knowledge onto you, while helping you to understand their motivators.
It’s a win-win.
CREATE A RISK-REWARD PAYMENT FEE STRUCTURE
All top negotiators plan and create a contingency contract first.
This is where value and leverage are created for you and the client.
It plays an important part in reducing the stress the client may experience around paying a higher fee.
Similarly, implement the equivalent of a contingency contract where you create or add value by adding leverage points, you make more money while providing a benefit for the client.
For example, if you get more than a certain amount for the property, you get rewarded with an additional fee.
In one way, you are also backing yourself to get a great result for the vendor, while the vendor is getting the assurance of a great result.
This strategy can also be used in negotiations with buyers to negotiate things like terms of settlement and penalties.
THE ROLE OF RHETORIC/ PERSUASION IN SALES NEGOTIATION
A skilled negotiator has to become proficient at arguing; not with aggressive behaviour but with expert use of language.
Many barristers are skilled at persuasion and influence, which is one of the reasons it is so difficult to argue with them.
Your ability to argue persuasively requires a heightened ability to listen and present different points of view without annoying your vendor or buyer.
It’s about controlling perceptions of the deal. Here are some areas you should focus on before any negotiation.
1. Focus on the vendors’ BATNA and their RV, not yours.
In the last issue, we referred to your BATNA (Best Alternative To a Negotiated Agreement) and RV (Reservation Value).
As a salesperson sometimes we tend to think too much or focus all our attention on our BATNA and our walk-away price or fee.
The only issue here is, when we focus on our needs, we often tend to ignore the issues that the client has, which should be looked upon as opportunities to create a relationship and create value.
A fee reduction request often has us thinking about what we stand to lose.
Focus instead, on what the client will lose – the enthusiasm, the added value – and make them aware of this.
2. Don’t concede on everything.
Use the principle of reciprocity to your advantage.
If you concede too quickly, you will fail to influence the client to give you something in return.
I hear many complaints from salespeople that they feel they give so much but get nothing back from their clients.
The art of getting a concession from the client is to learn to concede slowly and the most important thing is, if you fail to ask for reciprocation on the deal, then you won’t get anything.
It’s your psychology and your lack of execution skills that is costing you profit on the deal.
3 Embrace the pregnant pause.
We’ve all heard about the pregnant pause, the one who speaks first loses.
Get used to making an offer and staying silent.
It doesn’t matter how long it takes the vendor to answer your request; don’t break the silence.
This also works when the client challenges your fee. Wait it out.
You’ll often find the vendor will start to justify their position.
Timing is everything. It’s uncomfortable.
Get used to it, and after a while it becomes normal.
4 Identify your concessions.
If you are giving away a concession, make sure the client knows it.
Refer to the concession throughout the negotiation.
It creates subtle psychological pressure, which motivates the client to give you something in return.
Too many salespeople give concessions without expecting anything return.
5 Tell them what you want from them.
If you make a concession, let the vendor know what you want in return.
Tell them what it costs you.
They need to know you are making a concession, because if they don’t know, then they don’t know the value of what you are giving away.
People assume value without actually knowing its cost to you.
Most salespeople tend to make larger concessions or reduce their fee at the start of negotiation instead of at the end.
The problem here is, you give away your profit and leverage in the deal too fast, which leaves you with very little to negotiate with at the end of the deal.
There is little hope in creating value or leverage.
This is the art and science of negotiation.
Sure, it may take longer to do the deal, but the upside is you also make more money, and create a better relationship with the client.
6 Deal satisfaction.
The rapidly changing environment means you also need to build strong longterm relationships with buyers and vendors.
Your reputation as a star negotiator is what people will remember about you, this is about controlling their perceptions about you.
The key points in making deals negotiation include many psychological factors – yours, the clients’, and influences out of your control.
As an agent, your objectives are clear: get a good result for yourself, a good result for the client and build relationships.
Becoming a master negotiator takes time and the correct training.
Don’t give away value. Create it.