Why real estate agents need negotiation skills

If you are a residential real estate broker, you need a variety of business skills to be successful. In addition to experience in marketing and data analysis, knowledge of how to negotiate is essential.

Like any skill, your ability to negotiate skills should be practiced and developed regularly. Whether you've been in the industry for two months or 20 years, here are four crucial reasons to keep your negotiation skills sharp:.

Why real estate agents need negotiation skills:

1. Provide advice to your clients

Buying or selling a home isn't just a financial decision — it's an emotional one, too. Real estate agents who are skilled negotiators understand this on a deeper level. By learning about the psychological underpinnings of every action taken during the negotiation process, you can understand not only what motivates the other side, but also your clients.

Although you will not be able to read minds, knowing negotiation skills frameworks and methodologies will provide you with the skills to accurately read situations while making deals and responding effectively. As a real estate agent, you can even use this knowledge when negotiating your client's contract.

2. Maximize value

With an arsenal of negotiation tactics and strategies at your disposal, you can determine the best way to maximize the value of the deal. This may be accomplished by determining the optimal negotiation strategy to achieve the highest possible selling price for your seller, or it may require identifying every aspect of value in the transaction, beyond just the monetary components.

For example, if your seller wants to achieve a certain sales price, but is also looking to close on their property within a certain period, a skilled negotiator may work with the seller to evaluate which component is most important, and address that when making a counteroffer to potential buyers.

The same goes for real estate agents who represent buyer clients. An effective negotiator will consider the value the buyer brings to the table, such as using cash assets or a small mortgage amount to purchase it, as well as the sales price he or she is willing to pay. While money is important, the buyer's ability to perform is equally important. By expanding your negotiation skills, you can ensure you can identify value - wherever it lies - to get the best outcome for your client and close the deal.

3. Readiness for change

While websites like Zillow and Trulia have become established components of the home buying and selling process by providing housing data directly to consumers, the emergence of iBuyer models, like Opendoor and Offerpad, has the potential to upend the residential real estate transaction.

With the potential for significant change in the industry, it is important to emphasize the human value that only a real estate agent can provide. While the ability to interpret data and identify niche market features is important, these skills cannot be used properly without also having strong negotiation skills. When it comes to getting the results a buyer or seller wants, having a personal connection with a skilled attorney can be their best bet.

4. Differentiate yourself

According to the National Association of Realtors, there are about two million real estate agents in the United States alone, with millions more worldwide. By actively working to develop your negotiation skills, you can give yourself an edge over the competition and increase the likelihood that satisfied clients will refer you to others. Growing your network is one of the most reliable ways to gain new business.

Furthermore, actively participating in negotiation skills classes or coaching is a way to separate yourself from the pack during interviews with potential clients, along with listing your educational experiences on your resume, LinkedIn profile, and website. If you are serious about improving your skills, customers will know that you are serious about providing them with the best service possible

How to add value in negotiation

Negotiation is a two-way street. It is a process that involves not only claiming fair value but also establishing it.
Value creation can help resolve deadlocked disagreements, and turn good deals into very good deals.

Creating value in negotiation

Successful negotiation requires a careful balance between demanding and creating value. This balance is crucial, but often misunderstood.

Negotiation Mastery: “Value creation occurs when solutions are found that benefit both parties, or at least benefit one without making the other worse off.”

This is often called a win-win negotiation because both parties leave the negotiating table in the same or a better position than they arrived at.

On the other hand, claiming value refers to how value is distributed in a negotiation.

  “Once value creation is maximized, securing a greater share for one party necessarily leaves the other party with less.”

This scenario results in a losing negotiation, as one party naturally performs better than the other

Distributive versus integrative negotiation

Another common way to describe the relationship between claiming and value creation is through the idea of distributive and integrative negotiation. To understand the difference between the two types of negotiations, it is helpful to imagine the value that will be exchanged as a pie.

In distributive negotiation, each negotiating party must compete for its fair share of the pie. If one party takes a larger slice of the cake, the other party is inevitably left with a smaller piece. This form of value claiming negotiation results in a losing scenario.

In integrative negotiation, the focus is on expanding the pie by finding innovative ways to add value for all involved. By focusing on creating value rather than demanding it, both parties not only leave the negotiation satisfied, they foster goodwill and pave the way for future discussions.

If you want to become a more skilled residential real estate broker negotiator, here are three ways you can add value the next time you're at the negotiating table.

How to add value in negotiation

1. Building trust

Trust is an essential component of any effective negotiation strategy. Making deals comes with an inherent level of risk, which makes it extremely important for you to build a relationship with the other party.

“If you haven't established a level of trust — if people think you're hoarding your cards, or that you're being deceptive, or whatever the case may be — they have no incentive to be more open than you are.”

During bargaining conversations, strengthen the relationship with the other party by sharing information. Avoid revealing details that might jeopardize your position, but show that you are willing to provide some insight into your strategy and intentions in order to reach an agreement. In turn, the person on the other side of the table may be willing to do the same.

Express a genuine interest in understanding the other party's priorities as well. Ask open-ended questions that invite them to explain their position — rather than just stating it — so you can get a better idea of their motivations.

By establishing trust-based communication, a more engaging and productive dialogue can occur that encourages both sides of the table to explore opportunities for mutual gain.

2. Search for unfamiliar ground

Creating value requires focusing on areas where you and the other party have different interests and perceptions, rather than commonalities.

“It's not necessarily about finding the things you agree on, but the things you don't agree with.” “You may cherish something you have, but someone else's is just crazy. You have to be able to make a swap there.”
The key is to consider your differences across multiple issues. If you focus on one element at a time, you risk falling into a series of win-lose scenarios where one side comes out on top. While problem A may be your top priority, problem B may be problem B, creating an opportunity for a trade that can benefit both sides without any major sacrifices.

By finding and taking advantage of uncommon ground, you can not only secure maximum value for your organization and yourself, but you can enhance collaboration by meeting the other party's needs.

3. Be agile

Being a successful negotiator involves knowing how to think on your feet. Extensive preparation is an essential part of bargaining, but even the best laid plans can go awry. You must be prepared to adapt to changing circumstances.

, skilled dealmakers understand the importance of agility and improvisation.

“Even though you see yourself as a negotiator, most of the people you deal with will likely have a different style, at least to some extent.” “To succeed, you must be agile. This means flexing yourself so that you deploy different skills depending on the situation and the people you are dealing with.”

Over the course of conversations, keep your overarching goals in mind, but refine your tactics as you listen to the other side and learn more about their perspective. Have an idea of the best and worst-case scenarios so that you are prepared to propose solutions to challenges as they arise.

By taking a smart and creative approach to negotiation, you can discover new and exciting ways to trade and achieve greater results than you initially thought possible.