Negotiation Basics

Negotiations only have three outcomes: Lose – Lose, here both sides reach impasse and the deal dies. Lose – Win, one side prevails in the negotiations, but will the loser continue with the deal?  If one or both sides are adversarial and feel they must win this will be a tough negotiation. Win – Win, a negotiation goal is for each side to feel that they have obtained a fair deal; this usually is a result of compromise by both sides. 

Preparing for successful negotiations requires a proper attitude, as agents we sometimes need to coach our clients and customers “as to how the game is played”, that compromise is required. Meet ahead of time, create a strategy, determine what issues are most important, prioritize them and determine what can be compromised. 

You and your client must present a united front; act on the wishes of your client even if you don’t agree. In private you may try to change their mind. In the negotiations there should only be one spokesperson. 

Set the “stage” to avoid distractions. Try not to hold the negotiations in either of the principal’s private offices. Seek a conference room or better; meet in a neutral location,perhaps the real estate agents office. Ask everyone to turn off phones until the negotiations are completed. 

Before starting the discussions make sure all the facts are available and have been verified. Postponements due to incorrect, or a lack of information, may cause the talks to bog down. Delays provide time for other parties to make offers. 

Are the decision makers present? This is paramount; one negotiation tactic, The Higher Authority, is to negotiate the deal and then the opponent indicates this must now be approved by _____. You can be sure it will not be approved without additional changes being requested. 

Listen more, talk less! Gather information from the other side. What is most important to them? What points do they repeat? Take written notes of what has been agreed upon, what concessions the other side made, and what concessions you make. Observe the opponents body language and be aware of your own gestures and expressions. 

Deadlines help create decisive actions. Set a deadline for the meeting. Begin by saying I must leave in an hour. If the negotiations slow down remind them of your deadline. 

Resolve the main issues first, smaller issues can be set aside until later. Never let a negotiation bog down over a minor point. Concentrate on getting agreement on the major points such as price and terms. 

Set an insoluble problem aside. Make a note of the disagreement and come back to it at the end of the negotiations. If you’re very close to a deal, both parties will be motivated to find a solution to this last piece of the puzzle. Break these insoluble problems into several parts. Attach and solve each component separately. 

If an impasse is reached take a break. This allows both sides to discuss the issue with their clients. When returning from a break recap (from your notes) what has been agreed upon so far; this “progress report” helps encourage the resolve of the remaining issues. 

Negotiation Tactics

 We are exposed to negotiating tactics every day; we need to be able to understand these techniques, and learn to perhaps use some of them ourselves. Certainly, we must recognize them when they are being used against us, or in negotiations with our clients or customers. 

The Wince or Flinch, is a physical movement or facial expression; any negative, stunned or surprised reaction to someone’s offer. It says one has a limit. The “surprise” reaction puts pressure on the other party to bend. Wincing or flinching can save you money, it shows you are serious, but the proposed term is beyond your limit. Understand that you may be on the receiving end of this tactic too. “Wow, I did not think your commission was so high!” 

Silence, can be your strongest negotiating tool. After you have made your point, look directly at the other party, smile and wait. The longer you wait without saying anything the more uneasy the other person will become. If the other party makes an offer or presents a term you don’t like, say nothing, sit back and wait. Eventually they will say something to break the silence. It’s said, “he/she who speaks first loses”. Most people feel uncomfortable when conversation ceases, and they start talking to fill the void. Almost without fail, they start whittling away at their own position. 

When negotiating with someone who employs the same “silence” tactic, you both understand the technique; rather than wasting time in silence; restate your offer or position. Don’t make recommendations; just repeat your terms. This forces the other party to respond, usually with a concession. 

The Red Herringtechnique brings up minor points to distract from the main issues. Usually with an insistence to settle the minor points before moving forward. Suggest setting this point aside and work on other details. 

Big Pot Overload, another distraction technique where many things are asked for, more than are expected to be received. You need to find out what they really want. 

The Bone, give us concessions now on this deal; we will do more business with you in the future.If considered, contract for the future business now. 

Unacceptable Behavior - cursing, screaming, pounding on the table!

Socially unacceptable conduct is sometimes used as a negotiating tool. Throwing a fit, foul language, bursting into tears or a physical action is an attempt to get a sympathetic or “fear of loss” concession from the other side. Do not react to such behavior. Wait for the “fit” to calm down. Remember this is a tactic. Emotional negotiations will cost you! 

Bait and Switch – An offer draws in a buyer, who is then told the item is not available but, for a higher price you can buy… 

Here the danger is our appearing to do this. The customer saw a listing or a sign on a property that has been sold or rented. Their perception is we are doing a bait and switch.