A successful negotiation in which all parties feel a sense of accomplishment requires a shift in mindset, to “we all win” from “I win, you lose.” If this mindset is not in place first, the six negotiating tips discussed in last week’s blog may not be entirely useful.
Assuming your mindset has shifted to the “we all win” domain, remember that every negotiation has four stages, regardless of whether you’re asking for a raise, buying a new car, or asking the seller for a shorter closing date.
Four Stages of Negotiation
Stage 1: What it is that you want
Have a clear understanding of exactly what it is you want and write it down. For example, you would like to bring seller clients an offer to purchase their house but the offer is less than what they wanted. You want the sellers to accept the offer because you honestly believe the offer is reasonable and fair.
Stage 2: Determine what the other side wants
Conducting a ‘win-win’ negotiation is not possible unless you also understand what the other side wants. For example, the sellers want more money for their property.
Stage 3: Gather information
Negotiations are never about one issue or situation. Of course the main issue is important, but other considerations may be just as important. For example, the main issue could be the selling price or closing date. Other important issues that could derail a successful negotiation include the need for a home inspection or who pays for the survey.
While it is wise to keep the big picture in mind (i.e., selling price or closing date), remember the devil is in the details (i.e., small issues can become big issues). As such, gather as much information as possible about the situation. Obtain information by:
• asking open-ended questions
• repeating statements as questions
• asking for responses
• asking for restatements
Stage 4: Reach for compromise
Finding middle ground can be difficult if the sellers want one thing and the buyers want another. It’s unlikely that either party will reverse their positions. As a good negotiator, your role will be to look for alternative solutions that will satisfy the needs of both parties. For example, you may point out to the sellers that while the price may be less, the buyers are willing to agree to the sellers’ closing date and remove the sale of property condition.
Fifth Stage: Handling Concessions
As a real estate professional, your negotiations on behalf of clients will involve concessions, “a thing granted in response to demands.” A concession is not a loss. Rather, it is something done or agreed to, sometimes grudgingly, to reach an agreement or improve a situation.
It is unlikely you will bring a negotiation to a close without concessions, so make them count. For example, after making a concession, ask for a concession in return. This signals to the other parties that each time you meet their demand, you will expect something in return. It’s also important that you advise your clients that concessions are not a sign of weakness.
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Do you have an example of a win-win negotiation in which you participated? Let us know.
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