Modern real estate agents face an unprecedented market. Right now, there is a shortage of inventory that has never been seen before. As a result, houses are selling for $200,000, $500,000, and even $1 million over the asking price.
To close deals in this market, agents need to rewire how they think when representing a buyer and negotiating on their behalf.
Keep reading to learn some real estate negotiation skills to help you thrive in this difficult market:
Understand that it’s a whole new ball game.
In the past, homebuyers would formulate their offers with facts, logic, and reason, using comparable sales data and property estimates.
But right now, nothing is selling based on facts, logic, and reason. Any buyer trying to look at data to determine where to make an offer will simply not buy a home. That’s all there is to it.
Agents and buyers need to realize they are competing against a blank check in this marketplace. A “blank check” is the buyer who can pay any price they want for a home. They are not looking at comparable sales. They are not worried about what the future will bring. They simply want a home. And whether they pay $5,000 more than someone else or $50,000 more or $100,000 or more, it doesn’t make a difference to them. That being the case, you need to layout the landscape for each buyer that approaches you and articulate to them very clearly what they’re up against. And unless your buyer is willing to approach buying a home with this mindset… you cannot help them.
Make sure they are willing to pay more for less.
Because they will be competing against a blank check, your clients need to be comfortable paying more than anyone else if they want to buy property. You can share the following with every buyer…
There is one strategy that works every time if you want to be the winning bid. That strategy is paying more (and maybe a lot more) than anyone else.
You say this boldly and with conviction and then pause and see how your buyer responds. Their answer will reveal whether they are willing to do what it takes to buy a home in today’s market. Remember, it is not a sin to lose business. It is a sin to take a long time losing business.
On top of having to pay a lot more than any buyer wants to pay, they also are going to be getting less home than they want. This is reality. You are not being of service when you give any buyer a sense of false hope. Putting a positive spin on things will only make the process of buying more difficult and challenging.
However, all of this has to be delivered in a way that someone can actually hear what you are saying. Hitting someone with a brick in the face without bracing them first doesn’t help anyone. It is critical to label what your buyer is feeling in this market. Until they feel truly understood they cannot hear anything you are saying.
It must feel like you are never going to be able to buy a home.
The price you need to pay probably makes no sense to you.
You are probably hoping more homes will become available for sale.
You are probably thinking prices have to come down at some point.
Would it be wrong to assume you may fear you are buying right at the top of the market?
In other words, no buyer is getting a deal in this market. Everyone will feel as though they are overpaying, and you need to make sure your clients understand that. Getting a house might mean spending $100,000 more than the asking price.
Bottom line? Failing to prepare buyers will be an unpleasant experience that leaves everyone frustrated.
Acknowledge where the buyer is coming from.
Navigating this market is no easy feat. The value of taking the time upfront to acknowledge what the buyer is thinking and feeling and to make them feel understood cannot be stressed enough. You must get “on their side of the street” first!!
If your buyer is like most people, they will hope to get a good deal on a home they want to live in. By using Labels™ and Mirrors™, you can uncover what they are thinking before putting it together in a Summary™, which you will use to elicit the two magical words: "That's Rights"™.
Once you have a couple of "That's Rights" under your belt, it’s time to guide the buyer into the realities of the current market. You will have to let them know that the price they are willing to pay will have nothing to do with the home’s value.
Failure to be upfront and honest will come back to bite you in a big way when a buyer contacts you in the future asking why you made them pay so much for their home.
Make a great last impression.
In today’s market, most buyers don’t understand what they are up against. In many cases, buyers have to target houses considerably lower than their budget because they know they will have to pay way over the listing price. Someone with a $2 million budget, for example, might have to look at $1.5 million homes because they will have to bid $2 million to have any chance at winning a deal.
Making sure buyers understand this reality is paramount.. Not everyone will be willing to pay more for a house. Some buyers are going to insist they want to wait for the market to present more cost-friendly opportunities. When you’re honest about the state of the market, you position yourself as a trusted advisor who protects clients’ interests. So when they are ready to do business in the future, they will feel comfortable and confident in coming back to you.
Never forget: The last impression is the lasting impression. When you make a great last impression, you do wonders for your business.
Are you confident you know everything there is to know about real estate negotiation skills?
To continue your learning, check out our new e-book, Real Estate Negotiation: The 6 Biggest Mistakes Real Estate Agents Make.