Negotiating Tips For Real Estate Agents – 20 Proven Tactics
Negotiations for real estate agents are the most important part of the sale in my opinion. The reason is when you have poor negotiations the sale may never happen. Plain and simple.
Below we will reveal several REAL stories that we have encountered and negotiated over the years as well as tactics you can use and learn from to close more real estate transactions.
Be Positive In Real Estate Negotiations
A positive attitude is going to go a long way in your negotiations. Many times you are going to deal with a lot of emotions and other stressed parties.
As an example. You are working with your seller and priced at $300,000. You figure fair market is going to be around $285,000. You have been on the market almost 3 months and your first offer comes in at $260,000.
Bill, I have some excited news! We got an offer. Looks like they have solid financing in place and the due diligence periods are fairly quick! The only small issue I see is the offer is a little low. However, I know if we counter fairly we stand a good chance at putting a deal together!
** Tip – If you can get face to face with your seller to present the offer, it will work in your favor.
Now, your seller may act in a few different ways. Let’s take the worst case scenario. Steve, that is a bullshit low offer! Tell them to come with a better one as I am not going to consider it!
Again, you want to remain positive. This is where I like to shift. Bill, let’s say we were working together to find you a house to purchase. Would you want me to make an offer on your behalf at the top of your price point or would you want me to start out and test the waters? That’s right, we would test the waters to check out the motivation of the seller.
I think the offer is a little low and as mentioned when we first took the listing that I thought fair market is at $285k which puts us only $25k apart, that’s only 8%. So how about we show good faith and counter at $290,000? Who knows we might get close and get you into your next property sooner than you thought!!
Your tone has to be on point and again create the positive feeling for them that this is a good thing.
Learn Who You Are Dealing With In Real Estate Negotiations
You should be able to figure out the personality type of your client. However, the more difficult part is figuring out the agent across the table. You may not know them at all and you will have to dissect how to handle them appropriately.
Are you dealing with a push over, an ego freak, someone stressing to get the deal done to pay their bills or an agent who is cool, calm, collective working with you toward mutual grounds?
Quick Story – The Ego
Agent Ego: Steve. I received your offer. My client will never accept such a low offer, so go ahead and get your people to come up in price.
Me: Tyler, I understand you are not fond of the offer, however, I am sure there is middle ground we can meet at, so why don’t you present the offer and work on a counter for all of us?
Agent Ego: I’ve been selling homes in this area for 20 years now. I have sold over $4MM of property this year alone! I know my market and this is low!!
Me: So you’re not interested in making a transaction happen that could potential benefit all parties?
Agent Ego: No. (Hung Up)
Never Be Combative In Real Estate Negotiations
That was a true negotiation (I guess we can call it a negotiation) that took place about 6 months ago. As I am writing this, I checked MLS. Days On Market – 248. This dipshit agent allows his ego to control the process which in turn could severely effect his client.
The offer was $450k and asking price $500k. There is not reason why that agent should not have worked with us. My buyer was a cool guy. He knew there were plenty others in the area to choose from and didn’t want to counter his own offer out of principle. So we moved on and got him the right deal with a good agent to work with.
Now if I ever receive a lower offer, here is my response: Thank you Jill for your offer on 7th Ave. I did review it. The terms looked good, however the price is a bit low. I am going to present it and do everything I can to get a fair counter offer over to you.
Don’t Be Emotional In Real Estate Negotiations
It is as simple as that. This was an unemotional but respectful response above. I even gave her some praise on the terms of the offer and also expressed some concern on the price. I also explained I was willing to do what I can do to work with what we got.
You are going to work with a lot of buyers, sellers and real estate agents who are going to be extremely emotional and stressed out. It is imperative you remain the calm one.
As for the buyer or seller. We are not selling a $100 bicycle. So remember this. We are selling what is in many cases is the largest purchase or sale of their entire lives. So be sympathetic to that.
Quick Story – She’s Crazy
One of our agents calls me up: Steve, this agent is crazy!! Today is closing and she is trying to get her buyer not to close because there is about 10 bags of trash at the curb for pick up. Can you help?
I can tell my agent was getting very emotional and stressed. I decided I will give her a call direct so we can figure a simple resolution.
Me: Hey Mary, this is Steve, I’m the Broker at Maxim calling on behalf of the closing on XX Street.
Her: Ok. What do you want? (In a very rude demeanor)
Me: My agent was explaining you guys were not going to close due to some trash out front, do I have this right?
Her: Yes.
Me: Ok. Well, I am here to help get this transaction closed for everyone. What if we send someone out there in the next couple hours to get remove the bags?
Her: Well. That’s not going to work. My buyer is so disgusted how this has gone!
Me: Because of some trash out front?
Her: That and how rude your agent is!!
Me: I understand you are frustrated. And if our agent was rude to you, I am in no way going to defend him. However, I think the best bet is allow us to remove the garbage and get this closed out, what do you think?
The garbage really wasn’t the issue as much as how she felt she was treated by our agent. Later to find out, I read emails and texts from her to our agent and this lady was completely unstable and should not have a real estate license.
Bottom line, you will be put into situations where you will also have to calm people down. A good way to do this is to ask questions and validate their responses.
Validate What They Are Saying In Real Estate Negotiations
In the real scenario above, I asked questions, listened intently, responded to let her know I was listening and drew back to the closing.
Many times people want to vent and be heard. This is part of your job. If someone says something to you and you just move on to the next topic, you are going to have a very tough time getting people to work in your favor.
FSBO – I do not want to list with a real estate agent.
Me – I can appreciate that. What specifically is the reason why you wouldn’t hire an agent?
FSBO – My last house I sold, he didn’t deserve the commission!! This guy took the listing and we never heard from him! Not even after closing!
Me – Geez! So what you are saying is, if you were to hire a real estate agent like me, you would want really good communication?
FSBO – Yes!
Me – I completely understand because that is exactly what I would want as well. This is the reason why we have an office policy for all of our clients called, Follow Up Fridays. This is w here we touch base with you every Friday to talk about showings, feedback and market conditions. This is something you would want from your next agent right?
FSBO – Sure…
Me – Fantastic! Let’s do this. I would like to go into detail on what we do to aggressively sell property and further go into detail on what we do to keep you up to date on a weekly basis. How’s Friday at 5 or would 6pm be better?
As you can see I am listening intently, validating what they are saying, asking questions and going to the close.
Don’t Talk – Shhhhhh….
Know when to zip it. Do you ever watch Shark Tank? I don’t watch much television but I love this show. Do you ever see some of these people pitching a product or service and just will not be pipe down and listen?
Kevin O’Leary will be trying to talk through an offer and they will cut him off and continue trying to pitch.
Take the above example when I asked would Friday at 5 or would 6pm be better? You are going to hear silence from the seller in many cases thinking about it. If I open my mouth and start babbling away like Well I can meet any time convenient for you… They are more inclined to decline the offer. Just keep quiet. Let the natural sales process take place assuming you are asking the right questions.
Great real estate negotiators know when to speak and stop to listen. However, many agents have a hard time being quiet. In many cases, I can get on the phone, ask an agent about their listing and end the conversation with how low the seller will go on price, their motivation, if they still live in the area and much more.
Ask Questions In Real Estate Negotiations
Sales is a series of questions to get us to a desired result. The more questions we ask, the more info we have to assist. Clients can talk themselves out of deal, why? For example. A buyer says – You know what, forget it. I don’t think this community is right for us!
I look at it like, well they loved the amenities, the schools, etc. So use that in your questioning. What specifically is turning you off of this community? Questions like this assist people in figuring out the real underlying issue.
The Costco Effect
There was a story done on I think CNBC called the Costco Effect. It was great. Check it out. I am sure you can find it on YouTube. Anyway, the reason why the wholesalers did so well in the past is they limited the amount of options for any one product to the consumer. Usually 1-3. Consumers were less confused and more likely to purchase when their options where limited. When people are searching real estate they can get confused quickly, especially if you are looking at a lot of real estate. So ask questions why.
Offer A Higher Price
Many times if the offer is too low you may not get a counter and piss the seller off. The goal is to get the seller to play ball and not insult them. However, you still want to get a fair deal. I find it beneficial to offer higher initially and then when countering you do not have to come up significantly with each counter offer.
Don’t Negotiate Forever
In my estimation the successful negotiations take place with a maximum of 4 negotiations. When things go back and forth too many times, you begin to nickel and dime and fight over silly things like an extra day for inspection or $5,000 less of a purchase price.
Too many people get hung up on the small things as opposed to looking at the bigger picture. As an example – The seller has come down a tremendous amount and around 10% under market value. The buyer wants $5,000 less. You explain all of this to the buyer, then you break down the monthly payment is $27 more a month to get the deal done.
Is it worth risking the deal? No. If the deal doesn’t come together, the buyer may even get frustrated and never purchase. So be sure you are guiding your clients. I always will make suggestions on counter offers as opposed to them telling me what to counter.
Don’t Seem Desperate In Real Estate Negotiations
The other party will catch on quick if there is desperation. Many times a listing agent will be present for a showing appointment. You coach your buyer – Look the listing agent will be there for the showing. We know you need to lock something in today or tomorrow. If they ask you any motivation questions, be generic. Such as how soon do you have to buy? You can respond with – We are in no rush. We just want the right property and deal. ** We can then counter with a question for them such as – Do you think the seller is motivated?
On the flip side, I’ve had both buyer’s agents and listing agents show their desperation. Typical buyer agent – Steve, we have lost on 3 other deals. We have to get this one!! – Right away, I feel if they need it this badly, then we can likely get the price we want.
The listing agent. Steve, how did the showing go? The seller really wants to move this property. OK – My response – My buyers have some good options in the area. Maybe I can sweeten this property up for them but I need something to go back to them with. Any idea of what their bottom dollar is?
If you don’t ask you will never know. And honestly a lot of listing agents will disclose a number…
Have Fun With Real Estate Negotiations
Too many clients and Realtors get frazzled and stressed when it comes to negotiations. They are working it all wrong. I’ve always treated it more like an unemotional game.
It is always fun to see where you end up. As a real estate investor, when I am looking for my next deal(s), I am putting many offers a week out there. I always think, ok… How can I get as much info out of this agent to figure the motivation of the seller? At the end of the day, we have to get a good deal. But more so, we are helping the seller move on with their lives. They may not have gotten the best price, but we were able to close fast and they have cash in hand. Remember, it isn’t always about price…
Now, if you are working with a buyer or seller and showing them you are having fun with the process, they will be much more at ease. So enjoy and embrace the process.
Sometimes All We Need Is Some Time
There will be situations where the negotiations get heavy and stressful. If your clients begins to feel this way, do something like the following.
Mike, things are heavy right now huh? I know this house has been in the family for decades and you likely have a lot going on in your mind. Here is what I would like to do. The buyers have a lot of interest in this home. And I think they are really going to love it and treat it with the respect that you have. I am going to call the agent and tell him you are going to sleep on their last counter. Would that be ok with you?
Now, I might not do this with a seller where I think he would just squash the deal and take it off the market. But in this scenario if presented correctly, a little time maybe key.
Have A Plan Negotiating The Real Estate Deal
How is your presentation? Solid or are you just going to wing it? What about your scripts, objection handlers and dialogue? How are you going to present this offer to the listing agent? How are you going to present a low offer to a seller?
You have to have a plan going into every negotiation. Whether it is a listing presentation or contract negotiations. Just take some time and figure your pitch.
We had an offer come in last night on one of our listings. $1,550,000 firm. I called the agent to try to pull some info from him. Also, I wanted to know if he felt there would be any flexibility. This offer is $150,000 less than the ask price.
I waited about an hour before calling the seller. I wanted to figure all ways to present this offer without the seller just saying no. Even though the offer was firm, I was still able to get a counter that I believe would get the buyer to come up. I should hear back soon ; ))
What’s The Motivation? Use it!
When we revisit why someone is buying or selling we can dig deep into that to educate them again why we here at this point.
You said that you were sick and tired of blowing your money away on renting right??
The main reason for selling is to be back up north to spend as much time with the grandchildren right? So what are we holding on to here?
The motivation is what that person really needs. So we have to ensure we reflect back on that in order to guide them. Remember, people can be confused at times. And emotions will only make them more scattered.
Go Fishing
When working with another agent you will want to find out as much information about the buyer or seller on their end. There are so many bad agents with poor negotiation skills that will disclose entirely too much information.
Me: So why are they selling?
Agent: They just bought another home and have 2 mortgage now.
Don’t be this agent. I usually will say something like: Respectfully, I am not at liberty to explain why my client is selling. However, if you guys make an offer, I will do everything in my power to work a deal where everyone wins.
Many times I will call a listing agent and ask questions because many will talk too much as mentioned above. I have had agents tell me straight up before an offer was even presented. I know he will take $220,000. (Asking $240,000). Well, if he is willing to take $220k maybe he will take $200k…
Listing a property? If you are working with a seller, you have to know why they are selling. “Testing the market.” Is not really a good motivating factor for me and depending on price, I likely will not take the listing.
We want to work with motivated clients to buy or sell. So why are they buying or selling? If the motivation just isn’t there, then guess what? You will lose time and money because they likely will never buy or sell.
Use Humor In Real Estate Negotiations
I have found when I use appropriate humor it helps people put their guard down. Just be sure it is appropriate and at the right time. I remember joking with a FSBO over the phone one day and he took offense to it. It was a learning lesson for sure.
Keep it light.
Make Them Feel Comfortable
If you are working with a buyer, seller or another agent, if we can make them comfortable working with us, then odds are you will come to common ground. They will trust you want to work the deal with you.
Tell A Story
When we use a story in our real estate negotiations we can get people to trust our judgement and advice. It is imperative to be honest and ethical. For example:
I understand you are nervous about buying your first home and maybe having buyers’ remorse, I get it. You are on the hook for a $200,000 loan. May I share a story with you? I was scared to death when I was buying my first home. I felt like cancelling the contract every step of the way. However, when I closed, it was one of the most gratifying feelings I have ever had. This is mine! I can put my added touches on it. I can put my coi fountain in the front yard. I can build an outdoor kitchen. I can build my fire pit and use all my creativity into this home. And guess what, it paid off! Those improvements and market conditions netted me almost $50,000 tax free after two years.
You want the ability to potentially build equity and add all of your touches right? Also, you would be paying the same in a mortgage as your in rent right? Also you will actually pay less because you will be able to write off the interest and real estate taxes. So do you think it makes sense to move forward?
When we can relate with a true story we can make people concentrate on the positives as opposed to the negatives. They will also appreciate that you have been there in their exact situation.
And Finally… Get Creative
If you want to close more deals, get creative.
The highest price for your seller, isn’t necessarily the best offer. Let’s say you got two offers. One financed with a 45 day close and financing contingency for $455,000 and another offer with cash for $445,000, 5 day inspection and 15 day close.
Your seller, bought a house up north and has two mortgages. The hold cost on this house is $3,000 a month. Run the numbers. If the buyers cannot get financing after 45 days, then we are back on market square one. And that cash buyer is likely gone. Maybe we negotiate that cash buyer for a 10 day close with the 5 day inspection. Then we tell the other buyer it is theirs if this other buyer doesn’t perform within their 5 day due diligence.
Direct Exchange
I’ve closed more deals getting creative with direct real estate exchanges as well. Here’s a real scenario. A client calls me up. I have all of these vacant lots in Port Charlotte that I want to get rid of. However, the market is saturated. Any ideas? Sure do!
I asked questions and figured that he would be interested in owning income producing real estate. Got it!
I called about 100 agents who had listings of multifamily and got in touch with one who was open minded and creative. He had a 20 unit mobile home park listed. Here’s how it worked:
- $350,000 Purchase Price Mobile Home Park
- That seller of the park bought 5 lots from my guy for $75,000
- Simultaneous Closing
Win-Win-Win-Win
The seller of the park was an older gentlemen and didn’t want to deal with tenants any longer. He got cashed out and also got 5 lots free and clear which he intended on giving to his kids.
My guy got the downpayment from the sale of the lots which were free and clear and financed $275,000 ($350k-$75k) on the income producing park.
The two real estate agents (Me and Jim). We both got paid 3% on both sides. $425,000 (350k + 75k) x .03 = $12,750 each.
How Well Do You Negotiate As A Real Estate Agent?
Don’t wing it. Practice these techniques above with your fellow real estate agents. Have fun with it. Get better and better. You will close more deals and enjoy your real estate career even more!
If you have found the content in this article useful, please browse some of our other articles on this site. And as always, please share with another real estate agent who is looking to up their negotiation tactics!
To Your Success!!
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